United States v. Brodie ( 2005 )

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
4-12-2005
USA v. Brodie
Precedential or Non-Precedential: Precedential
Docket No. 02-2662
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 02-2662
UNITED STATES OF AMERICA,
Appellant
v.
STEFAN E. BRODIE
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 00-cr-00629-1)
District Judge: Honorable Mary A. McLaughlin
Argued October 26, 2004
Before: McKEE, FISHER, and BECKER, Circuit Judges.
(Filed: April 12, 2005)
Joseph G. Poluka (Argued)
Office of United States Attorney
615 Chestnut Street, Suite 1250
Philadelphia, PA 19106
Attorney for Appellant
Gregory B. Craig (Argued)
William T. Burke
Williams & Connolly
725 12th Street, N.W.
Washington, DC 20005
Attorneys for Appellee
OPINION OF THE COURT
FISHER, Circuit Judge.
Defendant Stefan E. Brodie was found guilty by a jury of
conspiring to trade with Cuba in violation of the American Cuban
embargo currently in place under the provisions of the Trading with
the Enemy Act of 1917 (“TWEA”) and the Cuban Assets Control
Regulations (“CACRs”). The United States District Court for the
Eastern District of Pennsylvania, ruling on a previously reserved
motion for judgment of acquittal, thereafter acquitted the Defendant
on the ground that there was insufficient evidence of his knowing and
willful participation in the charged conspiracy to support conviction.
United States v. Brodie, 268 F. Supp. 2d 408 (E.D. Pa. 2002). After
reviewing the government’s evidence against the Defendant, we
conclude that the District Court erred in entering the judgment of
acquittal, and accordingly, we vacate the judgment, reinstate the jury
verdict, and remand for further proceedings which may, on the
present record, include a new trial.
2
I. BACKGROUND
A. The American Cuban Embargo
The backdrop for this appeal is the American Cuban embargo
against trading with Cuba which derives in the first instance from the
TWEA, 50 U.S.C. App. § 1 et. seq. The TWEA as originally enacted
dealt only with the President’s use of economic powers in times of
war, but was expanded in 1933 to deal with national emergencies that
arose during peacetime. See Regan v. Wald, 468 U.S. 222, 226 n.2
(1984). Section 5(b) of the TWEA, in pertinent part, authorizes the
President, through a designated agency, to “investigate, regulate, ...
or prohibit ... transactions involving, any property in which any
foreign country or a national thereof has any interest, by any person,
or with respect to any property, subject to the jurisdiction of the
United States.” 50 U.S.C. App. § 5(b)(1)(B).1 Section 16, in turn,
criminalizes willful violation of any “order of the President issued in
compliance with the provisions of th[e TWEA].” 50 U.S.C.App.
1
TWEA Section 5(b) was amended in 1977 to limit the
President’s authority once again to times of war, but the same law
containing that limitation (i.e., The International Emergency
Economic Powers Act (“IEEPA”)) also grand-fathered existing
exercises of the President’s national emergency authority (including
the American Cuban embargo) and permitted the President to extend
their exercise in one year intervals where in the national interest. The
Cuban Liberty and Democratic Solidarity Act (popularly known as
LIBERTAD), enacted in 1996, continued the Cuban embargo
indefinitely and effectively suspended the IEEPA’s requirement that
the President revisit the basis for the American Cuban embargo each
year. See 22 U.S.C. §§ 6021-6091; see also United States v.
Plummer, 221 F.3d 1298, 1307-1308 & n.6 (11th Cir. 2000)
(reviewing this history).
3
§ 16. Presidential authority under the TWEA has been delegated to
the Secretary of the Treasury, who has in turn delegated that authority
to the Office of Foreign Assets Control (“OFAC”). See Regan, 468
U.S. at 226 n.2 (citing Exec. Order No. 9193, 3 C.F.R. 1174, 1175
(1942) and Treasury Department Order No. 128 (Rev. 1, Oct. 15,
1962)). In 1963, the CACRs were promulgated pursuant to TWEA
Section 5(b) to impose an embargo against Cuba in an effort “to deal
with the peacetime emergency created by Cuban attempts to
destabilize governments throughout Latin America.” Regan, 468
U.S. at 226. The CACRs incorporated and expanded upon prior
economic sanctions already imposed against Cuba. See id. at 226 &
n.4.
Of particular importance to this appeal is CACR § 515.201(b)
which provides:
(b) All of the following transactions are
prohibited except as specifically authorized by
the Secretary of the Treasury (or any person,
agency, or instrumentality designated by him)
by means of regulations, rulings, instructions,
licenses, or otherwise, if such transactions
involve property in which any foreign country
designated under this part,[2] or any national
2
CACR § 515.201(d) provides:
For the purposes of this part, the term ‘foreign country
designated under this part’ and the term ‘designated
foreign country’ mean Cuba and the term ‘effective
date’ and the term ‘effective date of this section’ mean
with respect to Cuba, or any national thereof, 12:01
a.m., e.s.t., July 8, 1963.
4
thereof, has at any time on or since the
effective date of this section had any interest
of any nature whatsoever, direct or indirect:
(1) All dealings in, including, without
limitation, transfers, withdrawals, or
exportations of, any property or evidences of
indebtedness or evidences of ownership of
property by any person subject to the
jurisdiction of the United States; and
(2) All transfers outside the United States with
regard to any property or property interest
subject to the jurisdiction of the United States.
See 31 C.F.R. § 515.201(b) (2005); see also 31 C.F.R. § 515.201(b)
(1992); 31 C.F.R. § 515.201(b) (1993); 31 C.F.R. § 515.201(b)
(2000). As CACR § 515.201(b) suggests, business transactions
involving Cuba may be specifically authorized by OFAC; here,
however, it is uncontested that no such authorization was ever
obtained for the business transactions that gave rise to the underlying
prosecution.
The phrase “person subject to the jurisdiction of the United
States” as used in CACR § 515.201(b) is defined in CACR
§ 515.329, 31 C.F.R. § 515.329, which provided, at the time the
conspiracy charged in this case was allegedly in effect:
31 C.F.R. § 515.201(d) (2005).
5
The term ‘person subject to the jurisdiction of the
United States’ includes:
(a) Any individual, wherever located, who is a citizen
or resident of the United States;
(b) Any person within the United States as defined in
§ 515.330;
(c) Any corporation organized under the laws of the
United States or of any State, territory, possession, or
district of the United States; and
(d) Any corporation, partnership, or association,
wherever organized or doing business, that is owned
or controlled by persons specified in paragraphs (a) or
(c) of this section.
31 C.F.R. § 515.329 (1993) (emphasis added); see also 31 C.F.R.
§ 515.329 (2000); 50 Fed. Reg. 27435 (July 3, 1985).3 The critical
3
Effective March 24, 2003, CACR § 515.329 was revised to
provide:
(c) Any corporation, partnership, association, or
other organization organized under the laws of the
United States or of any State, territory, possession, or
district of the United States; and
(d) Any corporation, partnership, association, or other
organization, wherever organized or doing business,
that is owned or controlled by persons specified in
paragraphs (a) or (c) of this section.
6
phrase “owned or controlled” in CACR § 515.329(d) is not defined
in the CACRs, but notably, the CACRs have included a broad
“person subject to the jurisdiction of the United States” feature from
their inception. See 28 Fed. Reg. 6974, 6978 (July 9, 1963) (CACR
§ 515.329).
The effect of the prohibition against entities “owned or
controlled by persons specified in [31 C.F.R. § 515.329 (a) or (c)]”
from undertaking any of the transactions prohibited by CACR
§ 515.201(b), was substantially muted in prior years by a regulatory
exemption permitting foreign subsidiaries of companies owned or
controlled by American citizens to trade with Cuba under certain
conditions, as well as liberal application of the licensing provision by
OFAC. See 31 C.F.R. § 515.559 (1975); 40 Fed. Reg. 47108 (Oct. 8,
1975).4 See also Ralph H. Folsom,1 INT ’L BUS. TRANS. § 18.4 (2d ed.
2004); Harry L. Clark, “Dealing with U.S. Extraterritorial Sanctions
and Foreign Countermeasures,” 20 U. PA . J. INT ’L ECON . L. 61, 66 &
n. 14 (Spring 1999); John Ellicott, “Between a Rock and a Hard
31 C.F.R. § 515.329 (2005) (emphasis added).
4
The regulatory exemption was contained in CACR § 515.559
(“Transactions by American-owned or controlled foreign firms with
Cuba”) which provided:
(A) Specific licenses will be issued in appropriate
cases for certain categories of transactions between
U.S.-owned or controlled firms in third countries and
Cuba, where local law requires, or policy in the third
country favors, trade with Cuba. The categories
include: [listing categories] ...
31 C.F.R. § 515.559 (1975).
7
Place: How Multinational Companies Address Conflicts Between
U.S. Sanctions and Foreign Blocking Measures,” 27 STETSON L. REV .
1365, 1368 (Spring 1998). Thus, in the latter part of the 1970's and
throughout the 1980's, “U.S. subsidiaries abroad developed
significant trade with Cuba.” 1 INT ’L BUS. TRANS. §18.4.
In 1992, Congress enacted the Cuban Democracy Act, Act of
Oct. 23, 1992, 106 Stat. 2575, codified at 22 U.S.C. §§ 6001-6010,
which, inter alia, rescinded OFAC’s authority to issue licences for the
export of goods to Cuba by “persons subject to the jurisdiction of the
United States.” See 22 U.S.C. § 6005(a) (popularly known as the
“Mack Amendment”). See also Clara David, “Trading With Cuba:
The Cuban Democracy Act and Export Rules,” 8 FLA . J. INT ’L Law
385 (Fall 1993) (author, then a licensing officer for OFAC, stating
that the Cuban Democracy Act eliminated the prior exemption to the
Cuban embargo for trade by foreign subsidiaries of American firms).
The Cuban Democracy Act took effect on October 23, 1992, and the
CACRs were subsequently amended to reflect the Act’s strict
provisions. See 31 C.F.R. § 515.559 (1993).5 In March 1996,
5
CACR § 515.559 currently provides, in pertinent part:
(a) Effective October 23, 1992, no specific licenses
will be issued pursuant to paragraph (b) of this section
for transactions between U.S.-owned or controlled
firms in third countries and Cuba for the exportation
to Cuba of commodities produced in the authorized
trade zone or for the importation of goods of Cuban
origin into countries in the authorized trade zone,
unless, in addition to meeting all requirements of
paragraph (b), one or more of the following conditions
are satisfied:
(1) The contract underlying the proposed
8
Congress further strengthened the American Cuban embargo by
enacting the LIBERTAD. Pub. L. No. 104-114, 110 Stat. 785 (1996),
codified at 22 U.S.C. §§ 6021-6091 (also known as the “Helms-
Burton Act”). The LIBERTAD mandates that the American Cuban
embargo, including all restrictions imposed by the CACRs, “remain
in effect” unless and until the embargo is suspended or terminated in
accordance with statutory procedures. 22 U.S.C. § 6032(h) (cross-
referencing 22 U.S.C. § 6064 (“Termination of the economic
embargo of Cuba”)). Such procedures, in turn, make suspension or
termination of the embargo contingent upon a change of political
power in Cuba. See 22 U.S.C. § 6064; see also 22 U.S.C. § 6065.
Numerous countries, including the European Union, Canada and
Mexico, reacted to the strengthening of the American Cuban
transaction was entered into prior to October 23,
1992;
(2) The transaction is for the exportation of
medicine or medical supplies from a third country to
Cuba, which shall not be restricted [except under
certain laws or in certain cases];
(3) The transaction is for the exportation of
telecommunications equipment from a third country,
when the equipment is determined to be necessary for
efficient and adequate telecommunications service
between the United States and Cuba.
(b) Specific licenses will be issued in appropriate
cases for certain categories of transactions between
U.S.-owned or controlled firms in third countries and
Cuba, where local law requires, or policy in the third
country favors, trade with Cuba. The categories
include [listing categories]. ...
31 C.F.R. § 515.559 (2005).
9
embargo, and its purported application to American subsidiaries
abroad, by enacting countermeasures (often called “blocking statutes”
or “blocking orders”). See, e.g., Clark, “Dealing with U.S.
Extraterritorial Sanctions,” 20 U. PA . J. INT ’L ECON . L. at 81-87.6
With this background, we turn now to the present appeal.
B. The Indictment
The Defendant Stefan E. Brodie and his brother Donald B.
Brodie (“Don Brodie”) were co-owners of The Bro-Tech Corporation,
an entity incorporated in Delaware, which manufactured and sold ion
exchange resins for industrial use in water purification under the trade
name “The Purolite Company.” The Bro-Tech Corporation was
headquartered in Bala Cynwyd, Pennsylvania, and had a
manufacturing plant and warehouse facility located in Philadelphia,
Pennsylvania. The Defendant was the president of The Bro-Tech
Corporation; his brother Don Brodie was the vice-president. Purolite
product was sold by salesmen operating from sales offices located
throughout North America, including one in Ontario, Canada
(“Purolite Canada”) from which James E. Sabzali (“Mr. Sabzali”), a
Canadian citizen, worked from approximately 1990 to 1995 until
promoted to a marketing position based in the Bala Cynwyd office.
The Defendant, Don Brodie and The Bro-Tech Corporation
owned, in approximately 1/3 shares, another corporation known as
6
The American Cuban embargo’s purported extraterritorial
reach has been criticized by numerous commentators. See, e.g.,
Clark, “Dealing with Extraterritorial Sanctions,” 20 U. PA . J. INT ’L
ECON . L. 61; Ellicott, “Between a Rock and a Hard Place,” 27 STET .
L. REV . 1465; Kam S. Wong, “The Cuban Democracy Act of 1992:
The Extraterritorial Scope of Section 1706(a),” 14 U. PA . J. INT ’L
BUS. L. 651 (Winter 1994).
10
Bro-Tech Limited, which was incorporated in the United Kingdom.7
Bro-Tech Limited was the parent company of “Purolite International
Limited,” which was also incorporated in the United Kingdom, and
manufactured ion exchange resins at a facility located in Pontyclun,
South Wales. Purolite International Limited (alternatively called “the
U.K. entity” herein to differentiate it from “The Purolite Company”
or the “U.S. entity”) had its own board of directors, sales people, and
finance department. The Brodie brothers, however, ultimately owned
and controlled the U.K. entities as well as the U.S. entities.
In late 1996-early 1997, the United States Customs Service
(which investigates illegal exports on behalf of OFAC) received
information leading it to suspect that The Purolite Company was
trading in violation of the American Cuban embargo. Customs agents
thereafter met with a Purolite official at the Bala Cynwyd office on
February 5, 1997, and, following some initial exchange of documents
between the agents and the company, a prosecutor was assigned and
grand jury subpoenas were issued to the company. On October 5,
2000, a grand jury indicted the Defendant, Don Brodie, The Bro-Tech
Corporation d/b/a/ “The Purolite Company,” and Mr. Sabzali on a
single count of conspiracy to violate 18 U.S.C. § 371 (criminalizing
the act of “conspir[ing] either to commit any offense against the
United States, or to defraud the United States, or any agency thereof”)
and 18 U.S.C. § 2 (criminalizing the act of “aid[ing] and abet[ting]
the commission of a crime against the United States”) by engaging in
transactions involving property with Cuba in contravention of the
7
Together, the Defendant, Don Brodie and The Bro-Tech
Corporation owned 95% of the shares in Bro-Tech Limited; 5% of the
shares were owned by a third-party.
11
TWEA, 50 U.S.C. App. §§ 5(b) & 16,8 and CACR § 515.201(b), 31
C.F.R. § 515.201(b). The conspiracy was alleged to have existed
from approximately April 1993 to May 2000. Overt acts in
furtherance of the conspiracy were alleged to have begun on or about
June 21, 1994 and to have ended on or about July 31, 1999. The
overt acts involved the sale of ion exchange resins, payment for the
product, and the payment of expenses related to business travel
undertaken by Don Brodie, Mr. Sabzali and others to, from and
within Cuba. Additionally, the grand jury indicted Don Brodie, The
Bro-Tech Corporation, and Mr. Sabzali for 76 additional substantive
violations of the TWEA and CACRs tied to specific sales of Purolite
8
Section 16 of the TWEA provides:
Whoever shall willfully violate any of the provisions
of this Act [sections 1 to 6, 7 to 39 and 41 to 44 of
this Appendix] or of any license, rule, or regulation
issued thereunder, and whoever shall willfully violate,
neglect, or refuse to comply with any order of the
President issued in compliance with the provisions of
the Act [said sections] shall, upon conviction, be fined
not more than $1,000,000, or if a natural person, be
fined not more than $100,000, or imprisoned for not
more than ten years, or both; and the officer, director,
or agent of any corporation who knowingly
participates in such violation shall, upon conviction,
be fined not more than $100,000 or imprisoned for not
more than ten years or both.
50 U.S.C. App. § 16(a) (West 2004) (brackets in the original).
12
product and expense-related transactions.9 The Defendant was
charged only with conspiracy to violate the TWEA and CACR
§ 515.201(b) as alleged in the first count of the indictment.
C. Proceedings Below
The District Court denied numerous pre-trial defense motions
to dismiss the indictment. In particular, on August 14, 2001, the
District Court denied motions to dismiss the indictment based on (1)
an alleged inconsistency between the CACRs and Section 620(a) of
the Foreign Assistance Act of 1961, 22 U.S.C. § 2370, and President
Kennedy’s February 3, 1962 Proclamation 3447 (27 Fed. Reg. 1085);
(2) an alleged failure of President Kennedy to declare a national
emergency with respect to Cuba; (3) an alleged unconstitutional
delegation of legislative powers to the Executive Branch by Section
5(b) of the TWEA; and (4) an alleged termination of the President’s
authority under Section 5(b) of the TWEA due to the fact that the
exercise of that authority by President George H.W. Bush on
September 13, 1991, was not published in the Federal Register until
September 23, 1991. Additionally, on October 24, 2001, the District
Court denied motions to dismiss all or parts of the indictment based
9
A fifth defendant, John H. Dolan, former director of
purchasing for The Purlolite Company with whom the Customs
agents met in the Bala Cynwyd office in February 1997, was also
indicted for one count of making false statements to government
officials in violation of 18 U.S.C. § 1001(a). Mr. Dolan’s trial was
severed from that of his co-defendants, and he later pleaded guilty to
a superceding information charging one count of concealing
information on imported articles and containers in violation of 19
U.S.C. § 1304(a). Mr. Dolan was sentenced to six months probation
and fined $2,000.
13
on principles of international comity, the foreign sovereign
compulsion doctrine10 and lack of jurisdiction.
The four defendants, each separately represented by counsel,
were then tried together in a single trial. At the close of the
government’s evidence, the Defendant made a motion pursuant to
Fed.R.Crim.P. 29(a) for judgment of acquittal. The District Court
reserved the motion pursuant to Rule 29(b),11 and the defense
thereafter put on its case. In charging the jury, the District Court gave
a willful blindness instruction over the objection of the defense,
thereby instructing the jury that it could find the knowledge element
of the crime to be satisfied if it concluded beyond a reasonable doubt
that the Defendant had deliberately closed his eyes to what otherwise
10
See Mannington Mills, Inc. v. Congoleum Corp., 595 F.2d
1287, 1293 (3d Cir. 1979) (explaining, in the context of an antitrust
action, that “[t]he sovereign compulsion defense is not principally
concerned with the validity or legality of the foreign government’s
order, but rather with whether it compelled the American business to
violate American antitrust law.”).
11
Fed.R.Crim.P. 29(b) provides:
Reserving Decision. The court may reserve decision
on the motion, proceed with the trial (where the
motion is made before the close of all the evidence),
submit the case to the jury, and decide the motion
either before the jury returns a verdict or after it
returns a verdict of guilty or is discharged without
having returned a verdict. If the court reserves
decision, it must decide the motion on the basis of the
evidence at the time the ruling was reserved.
14
would have been obvious to him concerning the facts in question.12
The jury then found all defendants guilty of the conspiracy charge in
Count I. Additionally, Don Brodie was found guilty of 33, The Bro-
Tech Corporation of 44, and Mr. Sabzali of 20, of the separate
substantive counts related to specific sales of Purolite product and
expense-related transactions.13 The jury also found The Bro-Tech
Corporation subject to a forfeiture of $665,737.
Following post-trial briefing and oral argument, the District
Court on May 31, 2002, granted the Defendant’s motion for judgment
of acquittal on the ground that there was insufficient evidence from
which the jury could have concluded beyond a reasonable doubt that
the Defendant had knowingly and willfully participated in the
conspiracy. 268 F. Supp. 2d 408. In granting the motion, the District
Court reasoned that the government’s evidence showed the Defendant
did not know it was unlawful under the CACRs for Purolite
International Limited, incorporated in and operating from the United
Kingdom (“U.K. entity”), to trade with Cuba if The Purolite
Company, incorporated in and operating from the United States
(“U.S. entity”), was not involved. See id. at 417. Additionally, the
District Court reasoned that, to the extent the government had proven
that the U.S. entity was actually involved in particular transactions,
the evidence also showed the Defendant was unaware of such
involvement. See id. The government filed the present appeal.
12
See United States v. Stewart, 185 F.3d 112, 126 (3d Cir.
1999).
13
Don Brodie, The Bro-Tech Corporation and Mr. Sabzali
were acquitted on all counts involving sales made in the time period
of 1997-1999, four of the sales made in 1996 and three of the sixteen
counts involving expense-related transactions.
15
Approximately a year later, the District Court denied the
motions for judgment of acquittal filed by Don Brodie, The Bro-Tech
Corporation and Mr. Sabzali, finding their convictions (including
those for conspiracy to violate the TWEA and CACRs) supported by
sufficient evidence. United States v. Brodie, 268 F. Supp. 2d 420,
423-424 (E.D. Pa. 2003). However, in that same ruling, the District
Court also granted all four defendants a new trial on the ground that
the government had made certain improper and inflammatory
comments and argument during its opening and closing statements
which prejudiced the jury. See id. at 424-35. Importantly, the District
Court granted a new trial for the Defendant conditional on the
outcome of the pending appeal. See id. at 436. The government
appealed also from the order granting a new trial, and that appeal was
consolidated by this Court with the present appeal. Thereafter, on
October 15, 2003, this Court granted the government’s motion to
remand the appeal taken from the grant of a new trial to allow the
District Court to consider the guilty pleas of Don Brodie, The Bro-
Tech Corporation and Mr. Sabzali.14 The District Court then
dismissed all remaining counts of the indictment as to these three
defendants, and the government voluntarily dismissed its appeal of
the order granting a new trial. Thus, the only issue before this Court
is the propriety of the judgment acquitting the Defendant.
14
Subsequently, Don Brodie pleaded guilty to Count 36 of the
indictment (involving his approval of expenditures in the amount of
$4,187 for Mr. Sabzali’s Cuba-related travel) and was sentenced to
one year probation and fined $10,000. The Bro-Tech Corporation
also pleaded guilty to Count 36 of the indictment, and was fined
$250,000. Mr. Sabzali pleaded guilty to a superceding information
charging a violation of 18 U.S.C. § 2 (aiding and abetting) and § 545
(smuggling goods into the United States), and was sentenced to one
year probation and fined $10,000.
16
II. STANDARD AND SCOPE OF REVIEW
In ruling on a motion for judgment of acquittal made pursuant
to Fed.R.Crim.P. 29, a district court must “‘review the record in the
light most favorable to the prosecution to determine whether any
rational trier of fact could have found proof of guilt beyond a
reasonable doubt based on the available evidence.’” United States v.
Smith, 294 F.3d 473, 476 (3d Cir. 2002) (quoting United States v.
Wolfe, 245 F.3d 257, 262 (3d Cir. 2001)). A finding of insufficiency
should be “‘confined to cases where the prosecution’s failure is
clear.’” Smith, 294 F.3d at 477 (quoting United States v. Leon, 739
F.2d 885, 891 (3d Cir. 1984)). Courts must be ever vigilant in the
context of Fed.R.Crim.P. 29 not to usurp the role of the jury by
weighing credibility and assigning weight to the evidence, or by
substituting its judgment for that of the jury. See United States v.
Jannotti, 673 F.2d 578, 581 (3d Cir. ) (en banc) (trial court usurped
jury function by deciding contested issues of fact), cert. denied, 457
U.S. 1106 (1982); see also Charles A. Wright, 2A FED . PRAC. & PRO .
(Criminal 3d) § 467 at 311 (2000) (“A number of familiar rules
circumscribe the court in determining whether the evidence is
sufficient ... It is not for the court to assess the credibility of
witnesses, weigh the evidence or draw inferences of fact from the
evidence. These are functions of the jury.”). On appeal from the
grant or denial of a motion for judgment of acquittal, this Court
exercises plenary review and independently applies the same standard
as the district court. See United States v. Coleman, 811 F.2d 804, 807
(3d Cir. 1987); Jannotti, 673 F.2d at 598.15
15
The Defendant urges this Court not to view the evidence in
the light most favorable to the government in conducting our review
due to the prosecutorial misconduct which, inter alia, gave rise to the
grant of a new trial. We reject this invitation as based on a
fundamental misunderstanding of the standard, as this Court is not
17
Our scope of review is dictated by the procedural posture in
which this case comes before us. The Defendant moved for a
judgment of acquittal at the close of the government’s case pursuant
to Fed.R.Crim.P. 29(a), and the District Court reserved decision on
the motion under Fed.R.Crim.P. 29(b). Accordingly, the District
Court was required to, and properly did, determine whether an
acquittal was appropriate based solely on the evidence presented by
the government. See Fed.R.Crim.P. 29(b) (“[i]f the [trial] court
reserves decision, it must decide the motion on the basis of the
evidence at the time the ruling was reserved”). The Advisory
Committee Notes to the 1994 Amendments to Fed.R.Crim.P. 29
provide that an appellate court, reviewing a judgment of acquittal
under Fed.R.Crim.P. 29(b), is “similarly limited.” Advisory
Committee Notes to 1994 Amendments. Thus, in reviewing the
judgment of acquittal entered below, we too will examine only to the
evidence presented in the government’s case, which includes
evidence elicited on cross-examination of the government witnesses,
but not evidence presented in the defense case. See id.; see also
United States v. Finn, 375 F.3d 1033, 1037 (10th Cir. 2004).
The elements of conspiracy – i.e., “an agreement, either
explicit or implicit, to commit an unlawful act, combined with intent
to commit an unlawful act, combined with intent to commit the
underlying offense” – can be proven entirely by circumstantial
evidence. United States v. Kapp, 781 F.2d 1008, 1010 (3d Cir.), cert.
denied, 475 U.S. 1024 (1986); see also Smith, 294 F.3d at 477 (listing
requirements for conspiracy and principle that they may be proven
entirely by circumstantial evidence); United States v. Fuentes-Coba,
738 F.2d 1191, 1196 (11th Cir. 1984) (listing same factors for
conspiracy under the TWEA), cert. denied, 469 U.S. 1213 (1985).
viewing the evidence in the light most favorable to the jury verdict
entered below.
18
Indeed, the very nature of the crime of conspiracy is such that it often
may be established only by indirect and circumstantial evidence. See,
e.g., Blumenthal v. United States, 332 U.S. 539, 557 (1947) (because
“[s]ecrecy and concealment are essential features of successful
conspiracy,” the law “rightly gives room for allowing the conviction
of those discovered upon showing sufficiently the essential nature of
the plan and their connections with it, without requiring evidence of
knowledge of all its details or of the participation of others”). Thus,
“[t]he existence of a conspiracy ‘can be inferred from evidence of
related facts and circumstances from which it appears as a reasonable
and logical inference, that the activities of the participants ... could
not have been carried on except as the result of a preconceived
scheme or common understanding.’” Smith, 294 F.3d at 477 (quoting
United States v. Gibbs, 190 F.3d 188, 197 (3d Cir. 1999) (quoting
Kapp, 781 F.2d at 1010)) (ellipsis in the original).
We must, however, give “close scrutiny” to the sufficiency of
the government’s evidence in a conspiracy case, see Coleman, 811
F.2d at 807, for the reasons that “[s]light evidence of a defendant’s
connection with a conspiracy is insufficient to support a guilty
verdict,” id. at 808, and “guilt must remain personal and individual.”
United States v. Samuels, 741 F.2d 570, 575 (3d Cir. 1984).
Conspiracy cannot be proven “by piling inference upon inference”
where those inferences do not logically support the ultimate finding
of guilt. Coleman, 811 F.2d at 808.
In conducting the sufficiency inquiry, we do not view the
government’s evidence in isolation, but rather, in conjunction and as
a whole. “The court must determine ‘whether all the pieces of
evidence, taken together, make a strong enough case to let a jury find
[the defendant] guilty beyond a reasonable doubt.’” Coleman, 811
F.2d at 807 (quoting United States v. Allard, 240 F.2d 840, 841 (3d
Cir. 1957)). See also United States v. United States Gypsum Co., 600
19
F.2d 414, 417 (3d Cir. 1979) (“‘[T]he character and effect of a
conspiracy (is) not to be judged by dismembering it and viewing its
separate parts, but only by looking at it as a whole.’”) (quoting United
States v. Patten, 226 U.S. 525 (1913)) (parenthesis in the original).
“To sustain a conspiracy conviction, the ‘contention that the evidence
also permits a less sinister conclusion is immaterial. ... [T]he
evidence need not be inconsistent with every conclusion save that of
guilt.’” Smith, 294 F.3d at 478 (quoting United States v. Dent, 149
F.3d 180, 188 (3d Cir. 1998)).
III. DISCUSSION
The bulk of the evidence presented by the government during
the joint trial of the Defendant and his three indicted co-conspirators
did not directly involve the Defendant’s participation in the
underlying conspiracy, but rather the accomplishment of particular
illegal acts by Don Brodie and Mr. Sabzali. The District Court, in
ruling on the Defendant’s motion for judgment of acquittal, noted that
the Defendant and the government had agreed during oral argument
on the motion that:
a reasonable jury could find that [The] Bro-Tech
[Corporation] made the following sales to Cuba
through intermediaries ...
1. From 1992 to 1993, four sales were made by
Bro-Tech through a Canadian company. The sales
were booked at Bro-Tech, and the product was
manufactured by and shipped from Purolite
International. These sales were not charged in the
indictment.
20
2. From 1994 to 1996, thirty-five sales were made by
Bro-Tech through intermediaries in Canada and
Mexico. At times the product sold was manufactured
by and shipped from Bro-Tech, and at other times
Purolite International.
3. From 1997 to 1999, twenty-four sales were made
by Bro-Tech through the intermediary San Marco. All
sales in this period were booked at Purolite
International, and the product was manufactured by
and shipped from Purolite International.
268 F. Supp. 2d at 410-11. The fact that these sales transactions
occurred, and the manner in which they were booked, manufactured
and shipped, is important background to the evidence presented
against the Defendant, but rather than set forth the evidence which
would support these facts, we too will incorporate this list of proven
transactions accepted by the District Court. See id.
Against the Defendant, the government presented what we
will categorize as six key pieces of circumstantial evidence: (1) the
basic company structure; (2) the “billing instruction,” and series of
events related to the 1992 audit of The Bro-Tech Corporation; (3) the
“our friends in the Caribbean” speech; (4) Mr. Sabzali’s 1995
performance review; (5) the pervasive use of “code words” for Cuba
by employees of The Bro-Tech Corporation d/b/a/ The Purolite
Company; and (6) several post-investigation events. This evidence
is set forth in Section III.A of this opinion. In Section III.B, because
we recognize that further proceedings on remand may include a new
trial, we clarify the intent requirement for conspiracy to violate the
TWEA and CACRs, and address the efficacy of the Defendant’s
intent-based defense which posited that he did not understand it was
unlawful for the U.K. entity to trade with Cuba and/or did not know
21
that the U.S. entity was actually involved in the trading. In Section
III.C, we assess the government’s evidence against the Defendant as
a comprehensive whole and in the light most favorable to the
government as required by the governing standard.
A. The Evidence Against The Defendant
1. Basic company structure
As noted above, the Defendant was the President and co-
owner with his brother Don Brodie of The Bro-Tech Corporation,
d/b/a “The Purolite Company.” Together with The Bro-Tech
Corporation, the Defendant and Don Brodie also owned, in
approximately 1/3 shares, Bro-Tech Limited, which was incorporated
in the United Kingdom. Bro-Tech Limited, in turn, controlled
Purolite International Limited, which was also incorporated in the
United Kingdom. Both the U.S. and the U.K. entities were controlled
by the Brodies. The Bro-Tech Corporation made over $2.1 million
dollars in gross income from its trade with Cuba.
In his capacity as President, the Defendant oversaw the
finances of The Bro-Tech Corporation and Purolite International
Limited, had direct supervision of Edward Grossman (who was The
Bro-Tech Corporation’s Chief Financial Officer), and served as the
primary contact for legal counsel to the company. The Defendant
also oversaw the European sales force, while Don Brodie oversaw the
North American sales force and Philadelphia manufacturing facility.
Edward Nace, a former products manager for The Purolite Company
from 1993 to 1997 who worked from the Bala Cynwyd office as a
liaison between sales and manufacturing, testified that both the
Defendant and Don Brodie reviewed on a “fairly frequent[]” basis the
hard-copy log book of daily purchase orders kept at the Bala Cynwyd
office, which listed customer name, type and quantity of product
22
ordered. Later, when the company switched to a computerized
system, both brothers would review the daily “edit reports” listing
orders.
The office in Bala Cynwyd was located on one part of one
floor in an office building that housed numerous other companies.
Approximately 30 employees worked in the Bala Cynwyd office,
including both the Defendant and Don Brodie over the course of the
charged conspiracy, as well as Mr. Sabzali beginning in early 1996.
Mr. Sabzali and Don Brodie shared a secretary in the Bala Cynwyd
office, at least through early 1998, and the Defendant’s secretary, at
least through early 1998, had her desk physically located directly
outside of Mr. Sabzali’s office.
On cross-examination, Mr. Grossman testified that during the
relevant time period (1993 to 2000), the Defendant spent a
“significant amount of time” (estimated at 70 to 80 %) away from the
Bala Cynwyd office establishing new manufacturing plants and sales
offices in China and Romania.
2. The billing instruction, audit and related events
During 1992, from his office in Canada, Mr. Sabzali sold
Purolite product through the Canadian subsidiary (“Purolite Canada”)
in four transactions to Galax, Incorporated (“Galax”). The product
was booked and invoiced from the Bala Cynwyd office, but
manufactured by and shipped from the U.K. entity. In 1986, the
United States Department of Treasury had designated Galax a
“specially designated national,” i.e., a company with which American
companies were prohibited from transacting business because the
23
designated company was known to have ties with Cuba.16 While
these 1992 transactions with Galax were not charged in the
indictment, they are important background to much of the evidence
presented against the Defendant because trial testimony established
that, in early 1993, the auditing firm of Deloitte & Touche LLP
conducted an audit of The Bro-Tech Corporation for the year 1992
and found reference to one of the 1992 sales to Galax. The auditor-
in-charge, Mr. Stephen Coulter, CPA, brought the reference directly
to the Defendant’s attention, and this touched off a series of events,
evidence of which forms the basis for the linchpin inference urged by
the government in this prosecution – i.e., that the Defendant knew his
company was conducting illegal sales transactions with Cuba and
knew that the U.S. entity was involved, or was at least willfully blind
to that involvement. That the 1992 transaction with Galax had
occurred and how the auditor’s concern about it was handled by the
Defendant are critical. While the trial testimony concerning this
series of events was often confusing and sometimes contradictory, we
attempt to set it forth as coherently as possible and in the light most
favorable to the government.
We begin with the evidence related to what we will call “the
billing instruction.” Mr. Grossman (former CFO of The Bro-Tech
Corporation) testified on direct examination that he was personally
aware of a sales transaction made to Galax in 1992. He explained
how he came to possess that knowledge:
16
A senior enforcement investigations officer of OFAC,
testifying for the government, explained the term SDN, that Galax
was an SDN, and that it had been so designated in 1986. See 31
C.F.R. § 500.306 (defining “specially designated national”); see also
31 C.F.R. Ch. V, App. A (2005) (listing Galax, Inc. as an SDN).
24
Q: And how do you know that – or how were you
aware of it? ...
A: Yes. During the year, in 1992 at some point,
[the Defendant] called me into his office and
indicated that there had been an invoice, this
Galax, and that it had a reference to Cuba on
there and that I should instruct the customer
service department, the billing department, to
make certain that they don’t include any
reference to Cuba in any future invoices on the
face of the invoice.
Q: Was that in 1992?
A: I believe so.
Q: Did you give such an instruction to the billing
department?
A: Yes, I did.
A. 716 (Grossman, direct).
Next is the evidence related to the audit. Deloitte & Touche
had been performing audits for The Bro-Tech Corporation since
approximately 1988, and for the year 1992, had been engaged to
express an opinion on the combined financial statements of The Bro-
Tech Corporation and Bro-Tech Limited. In the course of performing
the 1992 audit early in 1993, the auditors “found a shipment into
Cuba on a sales transaction .... [in a] dollar amount ... between 2 and
$300,000...” A. 304 (Coulter, direct). The occurrence of this
transaction was significant to the auditors because, as Mr. Coulter
25
explained, “[w]e are aware that U.S. companies were not supposed to
be shipping goods into Cuba because of the American boycott,” and
“to the extent a transaction is a potential illegal act, the auditor is
obligated to follow up on that transaction to determine the potential
consequences both from a financial reporting as well as a disclosure
point of view.” A. 304-05 (Coulter, direct). The auditors were
concerned that The Bro-Tech Corporation would be subject to a
monetary fine for the Galax transaction, which, depending on the
likelihood of assessment, would have to be addressed in the audit in
a particular fashion. In light of this concern, Mr. Coulter spoke
directly to the Defendant, as President of The Bro-Tech Corporation,
about the Galax transaction and its implications for the audit. Mr.
Coulter testified as to that conversation:
Q: Was that [conversation with the Defendant]
on the telephone or face to face or in what
way?
A: Well, there were numerous discussions
regarding the liability. Some were by
telephone, some were face to face and we did
have discussions, in addition to [the
Defendant] had discussions with Ed
Grossman.
...
Q: And when you talked to [the Defendant], what
was his explanation regarding this
transaction?
A: [The Defendant] indicated that the transaction
had been effected by a new salesman with the
26
company and that it was one transaction and
he understood that they should not be doing
this, and he was going to take steps to insure
that the company would detect any such
proposed transactions in the future.
A. 307 (Coulter, direct). Other testimony supported that the Galax
sale under discussion had been arranged by Mr. Sabzali operating
from Canada, and that he had been a salesman for the company since
approximately 1990 – i.e., two to three years before the outlined
conversation. Two “steps” were taken in the wake of the
conversation between the Defendant and Mr. Coulter concerning the
Galax transaction. We present these “steps” first as filtered through
the eyes of the auditors and then as they were “implemented” by The
Bro-Tech Corporation.
Subsequent to the conversation outlined above, the Defendant
showed Mr. Coulter a copy of the following memorandum written on
Purolite letterhead:
April 7, 1993
To: All Sales Offices
From: Steve Brodie
CC: Don Brodie/Ed Grossman
It has come to our attention, during the 1992 audit,
that a sale was made to the Canadian Company,
Galax. The Galax credit was checked in our
Philadelphia office, and approved. Subsequent to the
27
approval of the order, our shipping department in the
UK was ordered to drop-ship this order to Cuba.
While it is proper to ship this order from the UK in
terms of UK law, it is contrary to USA policy and law
to ship material of any kind to the island nation of
Cuba in violation of the US embargo. Brotech
Corporation is a US Corporate citizen, and as such,
has no intention of violating US policy, now nor in the
future.
No shipment of Purolite merchandise is to be shipped
to, redirected to, or trans-shipped to Cuba. Any
requests to do so are to be reported to Don or me.
/s/ Steve Brodie
A. 206 (Gov. Ex. 11) (hereinafter the “future policy memorandum”)
(emphasis added). In addition to being the purported issuer of the
future policy memorandum, the Defendant had also signed it. Mr.
Coulter, however, did not find the memorandum helpful for deciding
how to characterize the Galax transaction for auditing purposes, and
his reaction to the memorandum set off another important response
from the Defendant. As Mr. Coulter explained:
Q: When you saw this document, were you
satisfied it took care of the problem?
A: No, we were not.
Q: And why not?
28
A: Well, essentially that was certainly appropriate
going forward to insure that there were no
shipments to Cuba and we fully supported
that, however, the fact of the matter was that
there was a shipment in 1992 to Cuba and we
did not know the legal ramifications of that.
And we were requesting from the company a
legal opinion with respect to their exposure.
Q: And what was [the Defendant’s] reaction
when you told him you wanted a legal
opinion?
A: Well, again, because it was a single
transaction performed by a salesman that was
new to the company, [the Defendant] felt like
we were overreacting in requesting a legal
opinion and he did not want to incur the cost
of a legal opinion.
A. 314-15 (Coulter, direct) The legal opinion requested by Mr
Coulter was subsequently obtained, and Mr. Coulter participated in
a telephone discussion of that opinion with the attorney involved.
Mr. Coulter testified that the legal opinion, “together with
management’s representation that the transaction was unintentional
and inadvertent,” were relied upon by the auditors in determining that
the possibility of a fine related to the transaction was “remote.” A.
315 (Coulter, direct). The “remote” characterization was significant
to the auditors because, as Mr. Coulter explained, “‘remote’ mean[t
that] it’s less likely that a liability [here, a fine] has been incurred, and
in that instance there would be no requirement to either disclose or
record the liability” in the audit. A. 306-07 (Coulter, direct). When
the 1992 audit report for The Bro-Tech Corporation was subsequently
29
issued in July 1993, Deloitte & Touche also sent a letter addressed to
the “directors of Bro-Tech Corporation trading as the Purolite
Company to the attention of [the Defendant], President,” in which the
auditors characterized the legal opinion as they had understood and
relied upon it in issuing the 1992 audit:
The company inadvertently entered into a sales
transaction with a new customer that is listed by the
U.S. Department of Treasury as a specially designated
national (SDN). Sales to SDN’s are prohibited by law
and carry potential civil penalties which, depending
on intent, could be significant. The company’s legal
counsel has indicated based on very limited
knowledge of the transaction and the related federal
laws that since the sale was unintentional, the
likelihood of fines and penalties being assessed is
remote in this particular case.
A. 319 (Coulter, direct) (reading Gov. Ex. 4). Mr. Grossman testified
that he had received a copy of this letter most likely through the
Defendant’s secretary.
Prior to the issuance of the 1992 audit report in July 1993,
another “step” was taken in the wake of the auditors’ concern with the
Galax transaction. When asked if the Defendant had made any other
suggestions regarding what might be done with the Galax transaction
in terms of accounting, Mr. Coulter testified:
A: At one point in the process of dealing with
this issue, there was a suggestion that the sale
recorded in Bro-Tech Corporation’s books be
transferred to Bro-Tech, Limited’s [i.e., the
U.K. entity’s] books.
30
Q: And what was your response to that?
A: After considering it, we felt like we would
still need a legal opinion because the sales
transaction was initially recorded in Bro-Tech
Corporation’s books to begin with, and that
even if it were transferred to Bro-Tech,
Limited, we would not know the legal
implications of that either.
Q: Did that go any further, that suggestion?
A: I don’t believe it did, no.
A. 320 (Coulter, direct).17 On cross-examination, Mr. Coulter
explained that, in addition to recommending that a legal opinion be
obtained with respect to treatment of the Galax transaction for audit
purposes, Deloitte & Touche recommended that a set of checks be
instituted by the company to make certain that SDNs would not
become clients in the future. Someone from The Bro-Tech
Corporation – although their identity is not clear – told Mr. Coulter
that such checks would be implemented.18 A few months after the
17
But see infra. at 32-34, reviewing Grossman’s testimony
about transferring the sale to the U.K. entity’s books.
18
Also on cross-examination, Mr. Coulter explained that he
had participated in a telephone conversation during this same time
period related to the Galax transaction with someone at Coopers and
Lybrand, which was then performing audits for Bro-Tech Limited in
the United Kingdom. The impetus for the conversation was Deloitte
& Touche’s engagement to express a combined audit for The Bro-
Tech Corporation and Bro-Tech Limited for 1992, and Deloitte &
31
1992 audit report was issued in July 1993, someone from The Bro-
Tech Corporation – again their identity is unclear – informed Deloitte
& Touche that it was being replaced by Coopers and Lybrand.19 Mr.
Coulter acknowledged on cross-examination that Coopers and
Lybrand had already been performing audits for Bro-Tech Limited.
He also acknowledged that the Defendant had been upset with the
perceived untimeliness and expense of the 1992 audit report.
Mr. Grossman provided the view from inside The Bro-Tech
Corporation concerning how the “steps” identified by Mr. Coulter
were actually implemented by the company in the wake of the
auditors’ concern with the Galax transaction. He testified that indeed
a transfer of a Galax transaction to the books of Bro-Tech Limited did
occur, but his testimony was confusing as to whether that transfer
involved the 1992 Galax transaction found by Deloitte & Touche or
another Galax transaction in 1993. He testified:
Q: ... [Y]ou were aware of – you testified you
were aware of a Galax sale in ‘92, but you’re
not sure if it’s the same one that the auditors
found?
A: Correct.
Touche’s concern that there may be additional shipments to Cuba
relevant to the combined audit.
19
This fact was important to the government, which urged an
inference that the switch in auditors was undertaken to punish
Deloitte & Touche for finding and focusing on the problematic Galax
transaction and/or to ensure that The Bro-Tech Corporation was not
being serviced by auditors already aware of and therefore more prone
to scrutinize the company’s transactions for Cuban ties.
32
Q: What if any sales were you aware of to Galax
in 1993?
A: I’m not aware of any sales certainly that were
processed through the United States office.
Again, I believe – I’m sorry, I think that there
was a transaction in 1993 that had initially
been billed by the U.S. office and when this
was found a decision was made to in essence
transfer the sale to – so that it would come
through Purolite International Limited, monies
that were collected in connection with this
sale were collected by the U.S. company and
transferred to Purolite International Limited.
Q: Can you take a look, sir, at Government
Exhibit 10? Do you recognize that document?
A: Yes, I do.
Q: Is there a notation concerning something that
you asked to be done?
A: It’s dated March 31st, 1993. ‘Per Ed. G.,’
which would be myself –
...
Q: [ ] Do you want to tell us what this is all
about?
A: Again, this is a handwritten note dated 3/31/93
and it says “Per Ed. G.,” which is myself,
33
“$330,103.20 sale to be reversed, cash to be
reversed and forwarded to Purolite
International Limited,” it says, “conversation”
or “conversion to be Bala’s responsibility.”
Q: Well, did you make – who if anyone made that
decision with you?
A: This decision would have been made in
conjunction with [the Defendant], it probably
would have been a conversation that we had
once we understood that there was, you know,
a transaction related to Cuba and that there
would be funds coming into Purolite
Company as a result of that transaction.
Q: Is this at the time of the audit?
A: Yes. March 31st, ‘93, so the audit would have
taken place – either been completed shortly
before that or some time around that time
frame.
A. 720-722 (Grossman, direct).
Mr. Grossman also testified regarding the future policy
memorandum, a critical piece of evidence for both the prosecution
and the defense. Handwritten on the copy of the future policy
memorandum admitted at trial was a faxed notation, indicating that
the memorandum had been faxed as addressed on April 7, 1993, to all
sales offices, as well as to, inter alia, Don Brodie and Mr. Grossman.
Mr. Grossman testified that he received a copy; another salesman
testified that he did not. In addition to the memorandum itself
34
constituting evidence, Mr. Grossman testified that it was his
understanding that the memorandum encapsulated The Bro-Tech
Corporation’s policy regarding sales to Cuba in the future. On direct
examination, he testified:
Q: What if any decisions were made by [the
Defendant] in response to the Deloitte &
Touche audit?
A: My understanding is that any – any orders
having to do with Cuba would be processed
through the U.K. company. My understanding
at that time was that they did not have the
same restrictions on shipping to Cuba and this
if there, you know, was business having to do
with that it would – material would not only
be shipped from Purolite Limited, but it would
be, you know, billed by Purolite International
Limited[].
A. 719 (Grossman, direct). Mr. Grossman provided further critical
testimony regarding the future policy memorandum on cross-
examination, which we set forth in full:
Q: As a result of [ ] those events [i.e., the audit
events just discussed, having occurred in early
1993], you indicated that [the Defendant]
issued the memorandum that you looked at
dated April 7, 1993 [i.e., the future policy
memorandum], correct?
A: Correct.
35
Q: And as a result of those events the policy of
Purolite in the U.S. going forward was that if
future materials were to be shipped to Cuba
they would be shipped from Purolite
International in the United Kingdom and
billed by Purolite International in the United
Kingdom, correct?
A: That was my understanding, yes.
Q: And that was different from what had
happened in 1992, because in 1992 all of the
product had been manufactured and shipped
from the United Kingdom, [but] it was billed
out of the United States entity, correct?
A: It was billed out of the United States entity. I
can’t say without a doubt that a hundred
percent of the material came from Purolite
International Limited, I don’t know where all
of the material came to fill those orders, I
know that some ...
Q: Your understanding at the time was that it had
come from Purolite International, correct?
A: At least primarily, yeah.
Q: Now, you understood at that time that it was
lawful to ship product to Cuba from the
United Kingdom, did you not?
36
A: I understood, it was explained to me at some
point in time that they did not have the same
prohibition in the United Kingdom as we have
in the United States.
Q: And [the Defendant] told you in 1993 that he
understood that it was lawful for entities in the
United Kingdom to ship product to Cuba,
correct?
A: Yes.
Q: Now, in light of that decision [i.e., in April
1993], your understanding of what both Bro-
Tech’s finance department and Bro-Tech in
the United States should be doing generally
was that there should not be any future
transactions involving Bro-Tech in the U.S.
that involved the sale of product to Cuba,
correct?
A: Correct.
Q: And [the Defendant] told you as part of that
decision [i.e., in 1993] that future invoices
coming out of Bro-Tech should not reflect
sales to Cuba, correct?
A: Correct.
Q: And that was because future sales were
supposed to go out of Purolite International in
the United Kingdom, correct?
37
A: This is after – you’re talking about after the
Deloitte & Touche –
Q: After the Deloitte & Touche audit.
A: Correct.
Q: So your mission, as you understood it going
forward from 1993, was to ensure that your
finance department was not causing
transactions to be booked out of the United
States that involved sale of product to Cuba?
A: My understanding was that was not supposed
to happen. It was [the Defendant’s] and Don
Brodie’s company, so it wasn’t my decision as
to – you know, to accept orders and to conduct
commerce with Cuba, so my understanding is
that that wasn’t going to happen and that any
commerce with Cuba would be transacted
through Purolite International, Limited.
Q: ... You didn’t receive any instruction at that
time to delete or alter or destroy any records
that related to Cuba in 1993, did you?
A: That’s correct.
Q: And you didn’t give any such instructions to
anyone within the finance department,
correct?
A: That’s correct.
38
Q: So for the 1992 transactions that had
happened with Galax, the documents that
related to those remained within the finance
department of Bro-Tech, correct?
A: That’s correct [presumably, this suggests that,
although the 1992 Galax sale had been
transferred to Purolite International’s books,
Bro-Tech in the United States still had records
relating to that sale and the fact that it had
been transferred].
...
Q: Now, is it fair to say that in addition to the
principle that sales would now be booked out
of the U.K., you were taking efforts to ensure
that if anyone affiliated with Bro-Tech
traveled to Cuba that the expenses associated
with that travel would be borne by the United
Kingdom entity?
A: Yes.
Q: And that was because based on your
understanding the United States entity was not
to be involved in activity with respect to
Cuba?
A: That’s correct.
A. 747-49, 752 (Grossman, cross-examination).
39
3. The “Our friends in the Caribbean” speech
Craig Gentile, a regional salesman for The Bro-Tech
Corporation from 1990 to 1997, testified that the company held bi-
annual sales meetings in the spring and fall. Asked whether Cuba or
sales to Cuba were ever mentioned at those meetings, he testified:
A: There was only one time that Cuba was ever
mentioned in a sales meeting. ... It was either
fall of ‘91 or spring of ‘92. And we met at the
manufacturing facility in Philadelphia,
downstairs, and everybody gave their
presentation on their sales and what they were
going to do, projections for the next year or
how they had done previously. And Jim
Sabzali got up to give his presentation and
during his presentation he said that this was
the business that they were going to be doing
in Cuba and ...
Q: What happened then?
A: [The Defendant] jumped up, he was very
excited – I don’t remember exactly what he
said, but [Mr. Sabzali] just smiled and said,
[‘] well I mean our friends in the Caribbean.[’]
...
Q: What was your reaction to what happened?
A: I was surprised that [Mr. Sabzali] brought it up.
40
Q: What was the reaction of any other salespeople in the
room?
A: I think everybody was surprised, it got very quiet.
Then we proceeded.
A. 362-363 (Gentile, direct).
Mr. Gentile was questioned on cross-examination as to the
date of this incident. He had previously told the grand jury that the
event occurred in 1993 and on cross-examination at trial he
acknowledged this previous testimony. A. 371 (Gentile, cross-
examination) (“[Gentile]: I don’t have the transcript, but if that’s
what it says, that’s what I said.”). However, as set forth above, his
trial testimony placed the incident earlier in time, and before the
events of the 1992 audit report.
4. Mr. Sabzali’s 1995 performance review
Mr. Sabzali, who had arranged the transactions with Galax in
1992 from his Canadian office and who had spoken of Cuban sales
during the sales presentation witnessed by Mr. Gentile, was promoted
in 1995 to the position of Director of Marketing for the North
American operations of The Bro-Tech Corporation, and reassigned as
a result from Canada to the Bala Cynwyd office. The basis for the
promotion was summed up in a type-written performance review
dated May 16, 1995. Critically, the performance review took note of
Mr. Sabzali’s development of the “Caribbean territory to make
Purolite the dominant player” and his procurement of “sales in
Mexico as an adjunct to the Caribbean.” A. 207 (Gov. Ex. 14).20
20
As explained infra., “Caribbean” was generally understood
and used by many Bro-Tech/Purolite employees to refer to Cuba. On
41
Handwritten at the bottom of the performance review was the
notation: “New Position, Salary $102,000, Effective 4/1/94.” A
related memorandum identified Mr. Sabzali’s responsibilities in the
new position; importantly, however, he was to “continue handling the
Caribbean areas for North America.” Mr. Grossman testified that the
handwritten notation at the bottom of the performance review “looks
like the handwriting of – or the printing of [the Defendant],” A. 731
(Grossman, direct),21 and another former employee, Daniel
Opperman, testified that while it was Don Brodie who had hired Mr.
Opperman, it was the Defendant who had promoted him.
5. Pervasive use of “code words” for Cuba
A number of former employees of The Bro-Tech Corporation
testified that they understood, at the time of their employment during
the relevant time period, that terms like “the Caribbean,” “the island”
and “that island” were used to refer to Cuba. Specifically, Mr.
Grossman testified that “Caribbean island was kind of a code word
for Cuba after Deloitte and Touche’s findings in early 1993,” A. 725
(Grossman, direct), and that “Caribbean meant Cuba.” Id. at 728.
direct examination, Mr. Grossman testified that he could recall only
one other customer in the Caribbean, and that he too understood
Caribbean to mean Cuba.
21
As the District Court pointed out, 268 F. Supp. 2d at 416
n.3, there were problems with Mr. Grossman’s testimony in that he
did not specifically clarify that he had ever seen the Defendant’s
handwriting, and the defense was apparently caught off-guard by the
government’s elicitation of this lay opinion testimony on handwriting
during the trial. However, because no objection to this testimony was
made at trial, we, like the District Court, will consider it legitimate
evidence for the jury to consider.
42
Mr. Sabzali’s secretary in the Bala Cynwyd office from 1996 to early
1998 testified that she recalled two conversations with Mr. Sabzali
regarding Cuba, one of which she described as a “sort of smiling
conversation where he said, we refer to it as the island, not by its
formal name.” A. 1302 (Lenton, direct). Ms. Graves, a former
customer services employee in charge of processing sales orders for
The Purolite Company at the Bala Cynwyd office from approximately
1995 until her retirement in January 1999, testified that she and her
counterpart in the Canada office would frequently talk about
shipments to Cuba, but specified that in so doing, “[w]e didn’t refer
to them as shipments to Cuba, but ... as shipments to that island.” A.
880 (Graves, direct). Mr. Nace testified that he had told Mr. Sabzali
that he was uncomfortable receiving faxes from Sabzali openly
referring to Cuba and as a result, Mr. Sabzali referred to Cuba, at least
in dealings with Mr. Nace, as the Caribbean. Mr. Carlos Lugo, who
operated as a salesman of The Purolite Company in Mexico from
May 1996 to 2000,22 testified with reference to an expense report that
he had turned in to the Bala Cywyd office related to travel through
January 1998 that “Mr. Ed Grossman called me and said to me that
that report had to be redone because I stated that I was going to
Havana and the name Havana could not be in the report.” A. 601
(Lugo, direct). There was also testimony that words like Havana and
22
Mr. Lugo testified that in September 1995, he was contacted
by someone he characterized as the international manager of the
Purolite Company based in Bala Cynwyd, and asked to help
incorporate an arm of the Purolite Company in Mexico. In 1996, Mr.
Lugo “started as an employee of the Mexican entity” which was
owned “when it was created ... 50 percent by Mr. Don Brodie and 50
percent by [the Defendant].” A. 580 (Lugo, direct). Later, according
to Mr. Lugo, “98 percent of the shares were transferred to The Bro-
Tech Corporation.” Id.
43
Cuba were sometimes used rather openly in transaction and expense-
related documentation.
6. Post-investigation events
On February 5, 1997, and pursuant to an earlier telephone
conversation, Customs agents visited the Bala Cynwyd office and met
with Mr. Dolan. At that meeting, an agent “apprised Mr. Dolan that
we [Customs] had an investigation and it appeared, based on records
that I had in my possession and confidential source information, that
there were violations of illegal exports relative to the OFAC
regulations.” A. 1447 (McCrosson, direct). According to the agent,
Mr. Dolan responded that he had “researched [the company’s] files
based on the previous phone call and said he could only locate one
document relative to the names I had provided him.” Id. Mr. Dolan
then showed the agents a copy of the future policy memorandum,
which purported to state as a matter of company policy that the U. S.
entity was not to be involved in any sales to Cuba. With this
background, we present the evidence related to the post-investigation
events.
a. The Sabzali memoranda
The government introduced three memoranda written by Mr.
Sabzali in the weeks following the Customs agents’ visit. The first,
dated February 28, 1997, and addressed to Pilar Guzman, a woman
through whom Purolite product was sold to Cuban end-users,
provided in pertinent part: “Please note that pricing to San Marco
will change slightly for the four orders being ready, as well as for
future orders. The reason is that we now have to ship products from
U.K., and the easiest method would be to ship directly to Havana, and
not to Tampico.” A. 1310-11 (Lenton, direct, reading from Gov. Ex.
77) (emphasis added). The first memorandum did not identify the
44
Defendant as someone intended to receive a copy – he was not, in
other words, “carbon copied” on the first memorandum. The second
memorandum, also dated February 28, 1997, was addressed to an
Italian representative of The Purolite Company, and provided, in
pertinent part: “For future reference, please note that orders will be
sent from Milan to Pontyclun, but invoicing will be done directly
from Ponty to the customer in the Caribbean.” A. 1313 (Lenton,
direct, reading from Gov. Ex. 78) (emphasis added). The subject line
on the second memorandum referenced “four orders for the
Caribbean.” Id. The Defendant was carbon copied on this second
memorandum, and the secretary who faxed it testified that he would
have received his copy in the Bala Cynwyd office. The third
memorandum, dated March 3, 1997, and carbon copied to the
Defendant, provided further details regarding the “Caribbean orders,”
confirmed that the sales would be handled entirely through Purolite
International Limited, and openly listed the place of shipment as
Havana, Cuba.
b. Telephone calls
The government offered testimony related to two telephone
calls made by the Defendant after the investigation which lead to the
indictment was underway. In September 1999, months after she had
retired from The Purolite Company, Ms. Graves, the former sales
processing clerk, received a telephone call from the Defendant at her
home. She testified:
A: He asked me if I had been contacted by
anyone from the Government regarding the
Cuba sales.
Q: And what did you say?
45
A: I said yes, I had, and then he – I mentioned
that I had been questioned about, I believe it
was the shipments for Galax, and I mentioned
that there were other shipments after those,
and I said but I can’t remember the name of
the company.
Q: Shipments where?
A: To Cuba. And he said [‘] well, if you can’t
remember the name, then you don’t have
anything to tell them.[’]
A. 881 (Graves, direct). As noted above, the Defendant agreed during
oral argument on the motion for acquittal that other evidence in the
government’s case would support a finding that “from 1994 to 1996,
thirty-five sales were made by Bro-Tech through intermediaries in
Canada and Mexico.” See supra. at 20-21. The intermediary in
Mexico was an entity known as Ingenieria y Mantenimiento Industrial
(or “IMI”) and shipments to IMI occurred after the Galax sales. Ms.
Graves testified that, as a former sales processing clerk, she knew of
the sales through IMI. On cross-examination, Ms. Graves
acknowledged that the Defendant had expressed “interest and
curiosity” about the subject matter of the government investigation
during their telephone conversation, and that she knew at the time she
was interviewed by the government that the company had legal
counsel whom she did not advise of the interview. Additionally, she
testified that she had reported the telephone call to the government
and agreed to have a wire installed on her phone to record any future
calls from the Defendant, but he never called again.
The second telephone call identified by the government was
purportedly made by the Defendant to Mr. Lugo, the Purolite
46
salesman in Mexico. Mr. Lugo testified that he had met someone at
the United States Embassy in Mexico City at the request of the United
States government sometime after December 1997 or 1998.23 There,
he was asked “some questions regarding why I went to Cuba. ... if I
go to Cuba for business or anything.” A. 607 (Lugo, direct).
Subsequent to that meeting, Mr. Lugo reported on it at Mr. Sabzali’s
request to Mr. Dolan. Mr. Lugo testified that he then received a
telephone call from the Defendant:
Q: What if any conversations did you have with
[the Defendant] about your embassy visit?
A: After my visit, [the Defendant] called me and
said to me not to do it again with[out] inform
– informing before.
Q: Not to do what again?
A: To go to the [United States] embassy.
A. 612 (Lugo, direct). On cross-examination, Mr. Lugo
acknowledged that he knew at the time of his interview at the United
States Embassy that the company was represented by counsel and
under investigation for trading with Cuba. He also acknowledged
that he had previously testified before the grand jury that the embassy
visit occurred sometime in April or May 1999, and that it was Mr.
Sabzali, not the Defendant, who informed him following that visit
23
It is unclear from the record, and apparently unclear to Mr.
Lugo himself, exactly why he was contacted by the United States and
asked to visit the Embassy in Mexico City. He had, however,
previously had two boxes of Cuban cigars confiscated from him by
the United States Customs Service in Washington, D.C.
47
that the Defendant did not want him to go to the embassy again
without informing the company.
B. The Intent Requirement
On appeal, the Defendant argues in support of a separate
ground for affirming the judgment of acquittal – specifically, that the
government was required and failed to show that the Defendant had
knowledge of the specific CACR or licensing provision which he and
his co-conspirators were found to have violated. This argument relies
on an inaccurate statement of the law, which we find necessary to
correct in order to guide the District Court on remand should there be
a new trial.
The Defendant was indicted for conspiracy to violate Section
16 of the TWEA and CACR § 515.201(b), and accordingly the
government, in proving a conspiracy under 18 U.S.C. § 371, was
required to prove at least the degree of criminal intent necessary for
the underlying substantive offense of violating the American Cuban
embargo. See United States v. Feola, 420 U.S. 671, 686 (1975). To
prove conspiracy to violate the TWEA and the CACRs, the
government is required to show “specific intent.” See Fuentes-Coba,
738 F.2d at 1196 (prosecution for violating the American Cuban
embargo); United States v. Macko, 994 F.2d 1526 (11th Cir. 1993)
(same); see also United States v. Tooker, 957 F.2d 1209 (5th Cir.)
(prosecution for violating American embargo on trading with
Vietnam), cert. denied, 506 U.S. 864 (1992); United States v. Dien
Duc Huynh, 246 F.3d 734 (5th Cir. 2001) (same).
In the context of the TWEA, the specific intent requirement
demands that the government prove that a defendant had general
knowledge of the law which forbade his actions and acted with the
specific intent to circumvent that law. See Tooker, 957 F.2d at 1214.
48
But the government need not prove the defendant had knowledge of
the specific regulation governing the conduct engaged in – in other
words, a defendant “cannot ‘avoid prosecution by claiming that [he
or she] had not brushed up on the law.’” Id. (quoting Hamling v.
United States, 418 U.S. 87, 123 (1974)). See also Bryan v. United
States, 524 U.S. 184 (1998) (conviction for “willfully” violating
federal statute prohibiting sale of firearm without license requires a
showing that the defendant knew his conduct was unlawful, not that
he was aware of the particular licensing requirement); id. at 196
(“Thus, the willfulness requirement of § 924(a)(1)(D) does not carve
out an exception to the traditional rule that ignorance of the law is no
excuse; knowledge that the conduct is unlawful is all that is
required”); Liparota v. United States, 471 U.S. 419, 434 (1985)
(explaining in the context of prosecution for acquiring possession of
food stamps in a manner unauthorized by statute or regulations that
the government need not show “knowledge of specific regulations
governing food stamp acquisition or possession.”); United States v.
Tsai, 954 F.2d 155, 162 (3d Cir.) (stating in context of conviction for
violating Arms Export Control Act, “[i]f the defendant knew that the
export was in violation of the law, we are hard pressed to say that it
matters what the basis of that knowledge was.”), cert. denied, 506
U.S. 830 (1992). “Rather, the government must prove only that the
defendant[] knew that [his] planned conduct was legally prohibited
and that [he] therefore acted with an ‘evil-meaning mind.’” Tooker,
957 F.2d at 1214 (quoting Morissette v. United States, 342 U.S. 246,
251 (1952)). A jury may infer a willful violation of a known legal
obligation from the facts and circumstances surrounding the case.
See Tooker, 957 F.2d at 1214 (citing Liparota); Macko, 994 F.2d at
1535 (concluding “the evidence was sufficient for a reasonable jury
to find beyond a reasonable doubt that [the defendants] knew about
the Cuban trade embargo and deliberately violated it through their
own conduct or by aiding and abetting other individuals.”); Dien Duc
Huynh, 246 F.3d 743 (same in context of the Vietnam embargo); see
49
also United States v. Covarrubias, 94 F.3d 172, 175-76 (5th Cir.
1996) (finding, in context of prosecution for exporting weapons into
Mexico, sufficient evidence to support jury’s conclusion that
defendant knew that either a license or some other form of
authorization was required to lawfully transport weapons).
Of course, in this criminal conspiracy case, like any other, the
government must prove that the defendant had knowledge of the facts
that constitute the offense and of the illicit purpose of the conspiracy.
See, e.g., United States v. Idowu, 157 F.3d 265, 267 (3d Cir. 1998)
(explaining, in the context of a challenge to the sufficiency of the
evidence for a conspiracy conviction, that “the government is obliged
to prove beyond a reasonable doubt that the defendant had knowledge
of the particular illegal objective contemplated by the conspiracy”);
United States v. Pearlstein, 576 F.2d 531, 540-41 (3d Cir. 1978)
(stating, in the context of reversing conviction for mail fraud, that
“the evidence must indicate that the defendants had knowledge of the
fraudulent nature of the [ ] operation and wilfully participated in the
scheme with the intent that its illicit objectives be achieved”); see
also Bryan, 524 U.S. at 193 (“‘knowingly’ merely requires proof of
knowledge of the facts that constitute the offense”). The knowledge
element of a crime such as the one charged here may be satisfied
upon a showing beyond a reasonable doubt that a defendant had
actual knowledge or “deliberately closed his eyes to what otherwise
would have been obvious to him concerning the fact in question.”
United States v. Stewart, 185 F.3d 112, 126 (3d Cir. 1999). To find
knowledge premised on the latter “willful blindness” theory, the jury
must be able to conclude that “the defendant himself was objectively
aware of the high probability of the fact in question, and not merely
that a reasonable man would have been aware of the probability.”
United States v. Caminos, 770 F.2d 361, 365 (3d Cir. 1985). Willful
blindness is not to be equated with negligence or lack of due care, and
does not allow a conviction simply because the defendant “should
50
have known of facts of which he or she was unaware.” United States
v. Wert-Ruiz, 228 F.3d 250, 255 (3d Cir. 2000) (willful blindness is
a “subjective state of mind that is deemed to satisfy the scienter
requirement of knowledge”); see also United States v. Sharma, 190
F.3d 220, 231 (3d Cir. 1999) (purpose of a willful blindness
instruction is to “ensure[] that a juror who believed that a defendant
turned a blind eye towards his co-defendant’s conduct would not vote
to acquit the willfully blind defendant”). As noted, the government
pursued the willful blindness theory of knowledge at trial and the
District Court provided a correct willful blindness instruction to the
jury.
The indictment and the evidence presented by the government
in this case naturally tended to divide the overt acts in furtherance of
the conspiracy into two time frames: (1) 1994 (when the first overt
act was alleged to have occurred) through late 1996, and (2) early
1997 (when Customs agents first visited the Bala Cynwyd office) to
May 2000 (the end of the alleged conspiracy).24 We understand the
defense to have incorporated these two time frames into its argument
as to why the government failed to prove that the Defendant acted
with the requisite intent. He argues on appeal that the evidence “is
consistent with the fact that [he] did not know that any transactions
with Cuba were being carried out unlawfully through the United
States. Rather, he believed that all transactions with Cuba were being
24
Indeed as the Defendant states in his brief on appeal, “[t]he
government introduced evidence that, from 1994-1996, [The] Bro-
Tech [Corporation] engaged in transactions that ultimately involved
Cuba. From 1997-1999, however, [The] Bro-Tech [Corporation] did
not engage in sales to Cuba. Rather, sales to Cuba in 1997-1999 were
handled by PIL [Purolite International Limited] in the United
Kingdom, without United States involvement.” Brief of Appellee at
10.
51
handled lawfully by entities in Canada and the United Kingdom
without United States involvement.” Brief of Appellee at 11. In
other words, the Defendant contends that he believed at all times
pertinent to the charged conspiracy that trading with Cuba was lawful
so long as conducted through the U.K. entity without the participation
of the U.S. entity. To the extent that the evidence showed the U.S.
entity was actually involved in the transactions from 1994 through
1996 (which, as noted above, the Defendant agreed the evidence
could prove), then Defendant posits that he did not know of that
involvement, and hence could not have willfully violated the law. As
for the transactions which occurred from early 1997 through the end
of the charged conspiracy, the Defendant posits that he did not know
that trading with Cuba through a foreign subsidiary owned or
controlled by a American citizen was illegal, and hence could not
have acted with intent to violate the law.
Implicit in this defense strategy (and indeed obvious from the
face of the future policy memorandum that the Defendant purportedly
wrote and relies heavily upon for his defense) is an admission that the
Defendant understood that the U.S. entity was prohibited from trading
with Cuba, and indeed, that was a correct interpretation of the law.
To the extent that the Defendant also believed it was lawful for the
U.K. entity to trade with Cuba so long as the U.S. entity was not
involved, his interpretation of the law was incorrect, because as
written, the CACRs prohibit entities which are “owned or controlled”
by American citizens from trading with Cuba. See 31 C.F.R.
§§ 515.201(b), 515.329 (a), (c).25 We do not find it necessary,
25
The Defendant informs us in a footnote in his brief on appeal
that “evidence in the defense case demonstrated that [the Defendant]
tolerated these transactions only because he believed – based on
information from the British government and Bro-Tech’s outside
counsel, Morgan Lewis [& Bockius LLP] – that it would be illegal in
52
however, to determine whether the Defendant’s mistaken
understanding of the law as it related to trade conducted solely
through the U.K. entity in the latter time period should negate a
finding of specific intent and thereby support acquittal because, for
reasons that will become clearer as we examine the reasonable
inferences that arise from the government’s evidence below, we
conclude that a reasonable jury could find that the Defendant actually
knew of, or was willfully blind to, the involvement of the U.S. entity
in the transactions conducted in 1994-1996.26 Such a conclusion
would by itself support a conviction for conspiracy, as it is not
necessary for the government to prove anything related to the latter
Canada and in the United Kingdom to halt all such transactions in
deference to the United States embargo.” Brief of Appellee at 12. As
explained above, we do not review any evidence in the defense case
in assessing the propriety of the judgment of acquittal. However, we
take note of this footnote and of the fact (revealed to us by the
government) that the Brodies and The Bro-Tech Corporation have
pending a legal malpractice action against Morgan, Lewis & Bockius
LLP, to stress that we appreciate the broad context of this case, but do
not deem it relevant to the present decision.
26
The District Court also recognized that the evidence
“establishe[d] that [the Defendant] did know that it was illegal for the
U.S. company to be involved in sales to Cuba.” 268 F. Supp. 2d at
417. The District Court further reasoned that “[i]f there were
evidence ... that [the Defendant] knew about the involvement of the
U.S. company in some of the sales from 1994 through 1996, the
Court will assume that a rational jury could find that he knowingly
and willfully joined the conspiracy.” Id. at 417. The District Court
found insufficient evidence to support the inference of such
knowledge; examining the same evidence, however, we find it
sufficient to support that critical inference.
53
time period. However, we also conclude that a reasonable juror could
conclude on the evidence that the Defendant knew or was willfully
blind to the fact that the U.S. entity was still involved (albeit to a
much lesser degree) in the transactions that occurred in the latter time
frame.27 We now explore how these conclusions may be reached on
the evidence as a whole.
C. The Evidence as a Whole
We will by necessity segregate our discussion in terms of the
six key pieces of evidence identified above, but one should not miss
the forest for the trees. The inferences against the Defendant urged
by the government depend for their reasonableness on viewing the
evidence as a whole, and while the Defendant disputes the existence
of nearly every tree, we conclude that a reasonable jury could find
beyond a reasonable doubt that the Defendant did conspire to violate
the American Cuban embargo.
1. Basic company structure
We begin with the evidence related to the basic structure of
The Bro-Tech Corporation d/b/a/ The Purolite Company, not because
it was the most critical, but because a rational jury could legitimately
use it as a prism through which to assess all of the other
circumstantial evidence presented against the Defendant in this case.
27
Additionally, although the government urges the inference
that the Defendant actually knew of the participation of the U.S.
entity in the transactions conducted by the U.K. entity and we find
that inference reasonable, we believe that a rational jury might also
conclude from the evidence as a whole that the Defendant’s actions
belie a good faith belief in the legality of the “trading though the U.K.
is ok” policy which he espoused as the basis for his defense.
54
We believe, moreover, that this evidence is particularly revealing
when considered under the willful blindness instruction given by the
District Court.
From the facts related to the basic company structure, the
government urged an inference that the Defendant, as President of
The Bro-Tech Corporation, knew that the sales involving Cuba were
occurring and critically, that they involved the U.S. entity, or was at
the very least willfully blind to that fact. The District Court was
“very reluctant in a criminal conspiracy case, where the required
mental state is knowledge and willfulness, to give any weight to these
points,” 268 F. Supp. 2d at 420, and moreover, took explicit note of
testimony elicited on cross-examination that, during the period of the
charged conspiracy, the Defendant “spent 70-80% of his time out of
the country opening plants in Romania and China.” Id. We
conclude, however, that the District Court usurped the role of the jury
in its handling of this evidence.
In our view, it would be reasonable for a jury to give weight
– indeed, substantial weight – to the fact that the Defendant was the
President of The Bro-Tech Corporation; this, in turn, would support
the critical inference that he knew of the sales to Cuba and of the U.S.
entity’s involvement therein. This inference is only strengthened
when other basic facts pertaining to the corporate structure are added
into the mix. While The Bro-Tech Corporation had offices and
operations in various parts of the world, it was not a large company
as evidenced by the fact that its main office was housed on one floor
of a suburban Pennsylvania office building and that the men most
intimately involved in the prohibited sales – Don Brodie and later,
Mr. Sabzali – had their offices in that building in close proximity to
the Defendant’s office. The illegal sales to Cuba, moreover, which
grossed approximately $2.1 million, were not so minuscule as to
reasonably escape the notice of the company’s president. Finally, the
55
testimony tended to paint the Defendant as an active participant in
company affairs, not as a corporate figurehead whom a jury might
more readily infer was ignorant of the actions of his fellow officers
and subordinates.
A rational jury, moreover, could legitimately consider the
relationship between the Brodies in drawing reasonable inferences
about the Defendant’s knowledge and intent. While guilt for
conspiracy cannot be proven solely by familial relationships, see e.g.,
United States v. Williams-Hendricks, 805 F.2d 496, 502-503 (5th Cir.
1986), it is not the bare fact of kinship that drives the inference
sought by the government in this case, but rather the additional facts
that the brothers owned the entities involved, were active participants
in company affairs, and appear to have communicated with one
another on business-related issues, including Mr. Sabzali’s
promotion. There is no proscription against a jury considering and
drawing reasonable adverse inferences from such facts. See United
States v. Warshawsky, 20 F.3d 204, 209 n.2 (6th Cir. 1994) (noting
in context of prosecution for conspiracy to transport stolen parts that
“the jury could properly consider the fact that the defendants were
both brothers and business partners, which raises a permissible
inference that they might share information concerning their business
activities”); United States v. Investment Enterprises, Inc., 10 F.3d
263, 267 n.4 (5th Cir. 1993) (noting in context of prosecution of
company president for interstate transportation of obscene materials
that “[c]lose relationships can be part of the circumstantial evidence
from which a jury may infer that the defendant knew of a
conspiracy”); see also United States v. Loscalzo, 18 F.3d 374, 382
(7th Cir. 1994) (rejecting corporate president’s effort to paint his
participation in context of conviction for conspiracy to defraud the
United States and mail fraud as that of the “ignorant partner” where
evidence showed his financial benefit from the problematic
arrangement and his overall position of responsibility).
56
As was the case with various testimony elicited on cross-
examination of the government’s witnesses, the testimony concerning
the Defendant’s lengthy absences from the Bala Cynwyd office while
pursuing business elsewhere may be said to weaken the inference of
knowledge or willful blindness to the participation of the U.S. entity,
but it does not completely erase that inference or render it
unreasonable. Given the fact that this same evidence portrays the
Defendant as an active participant in his company’s affairs (he was,
after all, out of the office actively pursuing business on behalf of his
company), a juror might reasonably infer that he was not completely
disconnected from events concerning his company, even while
physically absent from his office. The weight and relevance of such
evidence is to be assessed by the jury; it is not to be deemed of
overriding importance by the court.
2. The billing instruction, audit and related events
The government and the defense each had their own theory as
to what the series of events concerning the 1992 Galax transaction
and the audit revealed about the state of the Defendant’s knowledge
of the illegality of the sales to Cuba and of the U.S. entity’s
involvement therein. The basic thrust of the government’s theory was
that, as revealed by the billing instruction, the Defendant already
knew about the 1992 Galax transaction before it was brought to his
attention by the auditors and that his actions related to the billing
instruction and the audit in the period of 1992 and 1993 reveal two
things: one, that he was attempting to conceal his knowledge of any
and all Cuba-related transactions that had already occurred and of the
U.S. entity’s involvement therein, and two, that he expected and
intended future transactions to occur. This global inference is tied to
a series of interconnected supporting inferences, each of which we
believe a rational jury could make on the evidence presented.
57
The first major supporting inference is tied to the billing
instruction. The District Court, noting that Mr. Grossman testified
that the billing instruction was given before the events of the audit,
concluded that a “permissible inference from [Mr. Grossman’s]
testimony is that [the Defendant] gave the instructions he did to Mr.
Grossman to conceal sales to Cuba.” 268 F. Supp. 2d at 418. We
agree, and further believe that a rational jury who concludes that the
billing instruction was given in 1992 could also infer therefrom that
the Defendant desired those sales to continue. In our view, a rational
jury viewing the evidence as a whole could conclude that it was this
action by the Defendant which dictated how sales to Cuba were
handled by the company in the 1994-1996 time-frame before the
investigation began. At the very least this evidence suggests that the
Defendant was willfully blind to the actions of the U.S. entity in the
1994-1996 period.
The second major supporting inference is tied to the events
concerning the audit. While the District Court did not specifically
explain why it rejected the government’s inferences from this
evidence, we conclude that it must have done so and did so
improperly. A rational jury, especially one that has already indulged
a negative inference against the Defendant in relation to the 1992
billing instruction, could infer that the Defendant (1) feigned
ignorance to the auditor who discovered the Galax sale in 1993; (2)
deliberately characterized Mr. Sabzali as a new employee (when he
knew differently28) and initially resisted the need for a legal opinion
28
The District Court, finding “no evidence that Mr. Sabzali
had been with the company since 1990,” emphatically rejected any
inference that the Defendant lied or somehow misrepresented the
truth to the auditors in 1993 when he characterized Mr. Sabzali as a
“new” employee. See 268 F. Supp. 2d at 418 n.6. Such evidence is
in the record however. Mr. Grossman testified on direct examination
58
on the effect of the Galax transaction, both in an effort to downplay
the significance of the transaction; and (3) fired the auditors who
discovered the Galax transaction, not out of dissatisfaction with their
services, but rather because of their knowledge of that transaction. A
jury that has indulged these reasonable inferences could also infer that
the Defendant knew the U.S. entity was violating the law and was
taking steps to ensure that future transactions would go unquestioned.
The third major supporting inference is tied to the future
policy memorandum, which purported to set forth company policy
regarding future sales to Cuba. This document was key to the both
sides’ theory of the case. The government urged one of two
characterizations – either the document was a “sham” in that it was
that, by the time Mr. Grossman began his employment with the
company in January 1991, Mr. Sabzali was already working in the
Canada office. Additionally, the following exchange occurred during
the cross-examination of Ms. Graves:
Q: ... From about 1990 until 1996, Mr. Sabzali
was the sales manager at the Purolite Canada
office, is that correct?
A: Yes.
A. 906 (Graves, cross-examination). If a jury found on the basis of
this evidence that Mr. Sabzali had been with the company since at
least 1990, it would be no leap to infer that the Defendant, as an
active participant in company affairs, knew that Mr. Sabzali was not
a “new” employee but deliberately characterized him as such to
downplay the significance of the uncovered Galax transaction (in
other words, to perhaps insinuate that Mr. Sabzali did not know any
better and the illegal transaction would not reoccur).
59
shown to the auditors but not actually issued to the salesman, or it
was “window-dressing” – i.e., a policy statement to which the
company could point while simultaneously engaging in transactions
with Cuba with the participation of the U.S. entity. The defense, on
the other hand, pointed to the future policy memorandum as setting
forth the Defendant’s good-faith belief that the U.K. entity could
trade with Cuba so long as the U.S. entity was not involved, and as
evidence that, far from violating the law, he was trying to abide by
it.29 The District Court rejected the sham characterization, see 268 F.
Supp. 2d at 418, and we agree there was insufficient evidence to
support it. The District Court also rejected the window-dressing
characterization, and it is here that we part company.
Attempting to understand the testimony related to the 1992
billing instruction in light of the future policy memorandum, the
29
We believe that the text of the future policy memorandum
reasonably could be viewed by a jury as refuting the Defendant’s
claim that he did not know it was illegal to ship Purolite product from
the U.K. entity. It provides, in pertinent part: “While it is proper to
ship this order from the UK in terms of UK law, it is contrary to USA
policy and law to ship material of any kind to the island nation of
Cuba in violation of the US embargo. ... No shipment of Purolite
merchandise is to be shipped to, redirected to, or trans-shipped to
Cuba.”(emphasis added). The term “transship” means “to transfer for
further transportation from one ship or conveyance to another.”
WEBSTER ’S THIRD NEW INTERNATIONAL DICTIONARY (G. & C.
Merriam Co. 1981). One could infer that shipments of Purolite
product, to the extent they were physically shipped from the U.K.
entity but otherwise handled in some manner by the U.S. entity (i.e.,
through sales, processing, etc.), were “transshipped” and hence under
the proscription of both the future policy memorandum and the
American Cuban embargo.
60
District Court appears to have viewed the latter as establishing a “new
policy with respect to Cuba” – i.e., one that would counteract the
1992 billing instruction. 268 F. Supp. 2d at 418. Further, the District
Court concluded there was “simply no evidence to support” the
window-dressing characterization, and that “[t]he fact that during the
period 1994 through 1996, there were sales to Cuba that at times
involved the United States is not evidence that the [D]efendant
intended the memorandum as a cover when there is not other
evidence that he knew about the sales. Nor was there any evidence
that [the Defendant] or anyone else followed up the memorandum
with either written or oral instructions that it was to be ignored.” Id.
In our view, however, a rational jury viewing the evidence as a whole
could draw the inference that the future policy memorandum was
window dressing.
The window dressing inference depends for its reasonableness
on all of the evidence put forth by the government in its case against
the Defendant. It is not a strong inference, but a jury that has
indulged adverse inferences against the Defendant related to the basic
facts of the company, the billing instruction and the events of the
audit (as well as from the “our friends in the Caribbean speech,” the
Sabzali performance review, the use of code words, and the post-
investigation events, all of which we examine below), it would not be
unreasonable to further infer that the future policy memorandum was
intended to put a public face on a behind-the-scenes agreement by the
principal actors to pursue sales to Cuba in violation of a known
prohibition. While the District Court placed significant emphasis on
Mr. Grossman’s cross-examination testimony, such presented
Grossman’s understanding of the future policy memorandum; it
would be up to the jury to square his testimony with all of the other
evidence in determining if Grossman’s understanding could be said
to reflect the Defendant’s intent. To our mind, there are a number of
ways to read Mr. Grossman’s testimony; to conclude that it may be
61
read only to negate a finding of intent by the Defendant is to overstep
the judicial role. The court’s obligation in the context of
Fed.R.Crim.P. 29 is to ensure that any inferences arising from
circumstantial evidence are reasonable, and we believe the window
dressing inference is that.
3. The “Our friends in the Caribbean” speech
Each side urged a different inference from the incident in
which Mr. Sabzali, following a whispered comment by the Defendant
during a sales presentation, substituted a reference to “the Caribbean”
in place of his previous reference to Cuba. The government offered
this evidence to show the Defendant engaged in an act of concealment
from which one could infer guilty knowledge. The defense countered
that any adverse inferences were unreasonable given the uncertainly
as to what the Defendant said to Mr. Sabzali and when the incident
occurred. Instead, the defense urged an inference that the event, if it
occurred in 1993 (i.e., after the issuance of the future policy
memorandum), merely showed the Defendant trying to comply with
the law as he understood it and had directed it be followed in the
future policy memorandum. The District Court rejected the
inferences favored by either side as illogical, and moreover, deemed
them both speculative due to the uncertainty of the Defendant’s
statement, his motive in speaking to Mr. Sabzali, and the date of the
incident. 268 F. Supp. 2d at 419.
The District Court’s handling of this circumstantial evidence,
which we believe a rational jury could view as particularly strong
against the Defendant, again invaded the province of the jury. While
one does not know exactly what the Defendant said to Mr. Sabzali,
a rational jury could reasonably infer the content of that statement
based on the reaction of both men. A rational jury viewing the
evidence as a whole could also draw a reasonable adverse inference
62
as to the Defendant’s motive in speaking to his subordinate. Such
inferences are not merely speculative, but have a logical and
convincing connection.
Additionally, the weight and value of this evidence should not
have been discounted due to uncertainty over when the incident
occurred. A rational juror, by choosing to believe Mr. Gentile’s
testimony as given at trial or as given before the grand jury (and
referenced during cross-examination at trial), could have accepted
that this event occurred in 1992 before the audit and related events or
in 1993 after the issuance of the future policy memorandum.
Critically, we believe that an inference of concealment would be
reasonable in conjunction with either date when put in the context of
the evidence as a whole. Furthermore, the inference of concealment
becomes even more reasonable when Mr. Sabzali’s use of
“Caribbean” during this incident – as apparently prompted by the
Defendant30 – is considered in light of the fact that many other
employees of The Bro-Tech Company, at the time of the speech or
later, understood “Caribbean” to be a code word for Cuba.
4. Mr. Sabzali’s performance review
The government urged a number of related inferences from
the evidence of Mr. Sabzali’s performance review and promotion –
mainly, that the Defendant was aware of and approved of Mr.
Sabzali’s sales to Cuba, wanted to reward him for those sales, and
30
We are not ourselves usurping the jury’s role by insinuating
that the Defendant actually told Mr. Sabzali during the whispered
conversation to use the term Caribbean; we are merely suggesting that
a rational juror could so infer or at least infer that the Defendant said
something less direct but equally meaningful to Mr. Sabzali, who then
himself chose the term Caribbean.
63
wanted such sales to continue as evidenced by the fact that, despite
being promoted to a marketing position, Mr. Sabzali was to continue
handling “the Caribbean sales.” The defense pointed to testimony in
the government’s case tending to undercut the reasonableness of such
inferences – mainly, that Don Brodie, not the Defendant, was in
charge of North American affairs, thus making it more reasonable to
infer that Don alone was responsible for Mr. Sabzali’s promotion, and
that Mr. Opperman was promoted by the Defendant to an
international position, thus making it unreasonable to infer that the
Defendant had a hand in a North American-related promotion like
Mr. Sabzali’s. In ruling on the motion for acquittal, the District Court
acknowledged that a rational juror could conclude that the reference
to “Caribbean” in the performance review meant Cuba, and that the
Defendant read the performance review, saw the reference and knew
therefrom that The Bro-Tech Corporation was selling product to
Cuba. 268 F. Supp. 2d at 419. However, the District Court rejected
any inference that the Defendant also knew, as a result, that the U.S.
entity (as opposed to solely the U.K. entity) was actually involved in
those sales. See id.
We agree that the evidence related to Mr. Sabzali’s
performance review would support the inferences identified by the
District Court, but believe there are additional ones that might be
drawn by a rational jury from the evidence as a whole. Specifically,
we believe a jury could reasonably infer that the Defendant not only
read the performance review, but approved of the underlying
promotion, knew it was based on Mr. Sabzali’s success in transacting
business with Cuba, and intended to reward and thereby incentivize
such sales in the future. We further part company with the District
Court in terms of what this evidence may suggest about the
Defendant’s knowledge of the involvement of the U.S. entity in such
sales. As all the evidence suggests that Mr. Sabzali was a star
salesman in “the Caribbean,” it would be not be an impermissible
64
leap to infer that an involved president of the company would know
why that was so and how it was occurring.
5. Use of code words
The government evidence shows a corporate culture pervaded
by the use of code words for Cuba, and such naturally gives rise to an
inference of concealment. See Macko, 994 F.2d at 1535 (“The one
aspect of the operation that they kept secret was the Cuban
connection. A jury could reasonably conclude that the defendants’
secrecy about this single fact resulted from their knowledge of the
Cuban embargo”). Importantly, the use of code words was attributed
at least twice to the Defendant. First, in issuing the billing instruction
to Mr. Grossman (whether that occurred in 1992 or 1993, after or in
conjunction with the events of the audit), the Defendant asked Mr.
Grossman to instruct the billing department not to include any
reference to Cuba on the face of future invoices, and that instruction
was given. A jury could reasonable conclude that this instruction
either instigated or at least contributed to an overall corporate culture
of deceit concerning transactions with Cuba. Second, it was the
Defendant whose actions before a room of subordinate salesmen
appear to have prompted Mr. Sabzali to refer to “Caribbean” instead
of to Cuba. Again, we believe that a rational jury could conclude that
the Defendant’s reaction to Mr. Sabzali’s use of the word Cuba either
instigated or at least attributed to the overall corporate culture of
deceit. Both were actions of the company’s president, not some low-
level employee whose behavior might be less influential. The use of
code words, when viewed in conjunction with the other evidence in
this case, tends to strengthen the overall inference that the Defendant
was a knowing and willful participant in the conspiracy to trade with
Cuba and understood that the U.S. entity was involved.
65
In an attempt to undermine the rationality of any adverse
inference from the use of code words, the defense pointed to the fact
that there was, simultaneously, rather open use of “Cuba” or
“Havana” in company memorandum, sales documents and expense
reports. There was also testimony elicited on cross-examination from
a former product manager for The Purolite Company to the effect that
he asked Mr. Sabzali not to use the word Cuba on anything sent to
him. Finally, there was testimony from Mr. Grossman that The Bro-
Tech Corporation had other customers in the Caribbean, although he
could only recall one. Again, this evidence does tend to weaken the
inference of concealment, but critically, does not render it completely
unreasonable. The weight to be assigned the use of code words in
this prosecution on circumstantial evidence is for the jury.
6. Post-investigation events
The government urged that the Sabzali memorandum of
February 28, 1997, showed that transactions involving Cuba
conducted before the Customs agents’ visit a few weeks prior
involved the U.S. entity. In other words, there would be no need to
explain in that memorandum “we now have to ship products from
U.K.” if such had already been the procedure. Similarly, there would
be no need to explain that invoicing to the “customer in the
Caribbean” would now be done directly “from Ponty” unless prior
procedure had involved the U.S. entity. This memo was not carbon
copied to the Defendant, but the government contended that a
reasonable juror viewing the evidence as a whole could infer the
Defendant’s knowledge of its underlying premise (i.e., that sales
before the investigation were conducted with the participation of the
U.S. entity). From the fact that the Defendant was carbon-copied on
Mr. Sabzali’s February 28, 1997 and March 3, 1997 memoranda, the
government urged an inference that the Defendant read these
documents and thereby knew of the continued participation of the
66
U.S. entity in the sales occurring in early 1997 from the fact that Mr.
Sabzali was now directing sales in “the Caribbean” from his office in
Bala Cynwyd. The participation of the U.S. entity was certainly less
(or at least on the decline) at this point, but as evidenced by these
memoranda, still involved the U.S. entity’s Bala Cynwyd office. The
District Court never addressed whether any reasonable inferences
against the Defendant arise from this evidence, having merely noted
in a footnote the existence of the two memoranda carbon copied to
the Defendant. Again, however, we believe that a rational jury
viewing the evidence as a whole could use them to draw adverse
inferences against the Defendant.
From the evidence of the Defendant’s phone call to Ms.
Graves, the government urged an inference of concealment and
therefore of knowledge of past wrongdoing. The defense sought to
undercut any adverse inference by noting a lack of evidence to
suggest that the Defendant knew Ms. Graves would be interviewed
by the government again and by urging that the critical statement – “if
you can’t remember the name, then you don’t have anything to tell
them” – be taken at face value as merely an innocent observation. In
ruling on the motion, the District Court acknowledged that the
government’s inference as to the call to Ms. Graves was a “fair one,”
but ultimately assigned it no value, reasoning: “[This] inference does
not shed any light on whether the defendant knew about the 1994 to
1996 shipments before or at the time they were occurring. This
conversation took place two years after the government had started its
investigation. [The Defendant] surely would have known about the
shipments at that point ...” 268 F. Supp. 2d at 419. We agree that an
inference of concealment is reasonable and further conclude that a
rational jury viewing the evidence as a whole could further infer, as
the impetus for the act of calling Ms. Graves, that the Defendant
knew of the illegal sales activity during the relevant time frame. It is
just as reasonable (if not more so) to infer that the Defendant was
67
seeking to conceal illegal activity involving the U.S. entity that
predated the investigation of which he knew at the time he called Ms.
Graves than it is to conclude he was seeking to conceal acts which he
now understood to have been illegal. The mere fact that he chose to
contact Ms. Graves in 1999 – a woman who, by virtue of her former
position as a customer sales representative processing orders, might
have seen orders involving transactions with Cuba – is itself
important. Moreover, a rational jury viewing the evidence as a whole
could certainly decline to interpret the Defendant’s advice to Ms.
Graves as benign, and instead view it as another instance of the
Defendant attempting to conceal the Cuban transactions.
The government also urged an inference of concealment from
the Defendant’s reaction to Mr. Lugo’s visit to the U.S. embassy.
The District Court stated unequivocally that “a rational juror could
not make a negative inference here” because “[t]he defendant was
telling an employee to let him know if he is called in again to the U.S.
Embassy because of a concern ‘that U.S. officials would be asking
[Lugo] questions without company counsel present.’” 268 F. Supp.
2d at 419-20 (emphasis added, brackets in the original). See also id.
at 420 (“The Lugo discussion adds very little, if anything, to the
government’s case.”). We acknowledge the uncertainty on the record
about the timing of Mr. Lugo’s visit to the embassy and whether the
Defendant relayed his reaction thereto directly to Mr. Lugo, or
through Mr. Sabzali. For present purposes, however, it is the reaction
itself, coming sometime after the investigation was underway and
presumably known to the Defendant, that is the key to the inference
of concealment. A rational jury viewing the evidence as a whole need
not have accepted the Defendant’s explanation that the instruction to
Mr. Lugo was borne solely of a concern with having counsel present.
Instead, one could reasonably conclude that, like the veiled
instruction given to Ms. Graves, the instruction to Mr. Lugo was
motivated by a desire to conceal past wrongdoing.
68
D. Willful Blindness
As explained above, we are satisfied that a reasonable jury
could conclude beyond a reasonable doubt that the Defendant had
actual knowledge of the law violated, the facts constituting the
offense and the illicit purpose of the conspiracy. We also conclude
that a reasonable jury could find the knowledge requirements of the
crime met on a theory of willful blindness. Overall, the government’s
evidence paints a convincing picture of the Defendant as a company
president who deliberately stuck his head in the sand regarding the
involvement of the U.S. entity in the prohibited transactions. In
particular, the evidence related to the billing instruction could be
viewed as the Defendant trying to ensure that he never saw a direct
reference to Cuba again, despite intending the transactions to
continue. The corporate culture wherein Cuba was referred to by
“code words,” which a reasonable jury could attribute at least in part
to the conduct of the Defendant, only aided him in his effort to ignore
what should have been obvious. And while the Defendant repeatedly
argues that the future policy memorandum and the events of the audit
show him trying to discern and comply with the law, a jury might
reasonably take note of the Defendant’s failure to ask the “natural
follow-up question[s]” when, for example, he did not question the
reference to “Caribbean” on Mr. Sabzali’s performance review, and
never instigated any follow-up to the events of the 1992 audit report
(as he suggested to Mr. Coulter that he would) or to his own
instruction in the future policy memorandum, to ensure that his
company was not transacting business with SDNs or with Cuba. See
Wert-Ruiz, 228 F.3d at 257 (stating, in context of conviction for
money laundering, that “the fact that [defendant] did not ask the
natural follow-up question to determine the source of those funds
could be reasonably considered by a jury to be evidence of willful
blindness, especially when combined with the additional evidence”).
The basic facts of the company structure also strengthen the willful
69
blindness inference in that it would not be unreasonable for a jury to
infer that the Defendant was motivated to deliberately avoid learning
the facts related to his company’s trade with Cuba due to its
profitability or his brother’s involvement. As in Stewart, where this
Court concluded that a jury could have found that a defendant former
law partner, who argued that he lacked the intent to defraud since he
relied on solvency findings by third-party investigators, “could have
recognized the likelihood of insolvency yet deliberately avoided
learning the true facts,” 185 F.3d 126, we conclude that the Defendant
in this case could have recognized the likelihood that the U.S. entity
was involved in illegal transactions with Cuba “yet deliberately
avoided learning the true facts.”
IV. CONCLUSION
Deciding a motion for judgment of acquittal in a conspiracy
case built entirely on circumstantial evidence is not an easy task, and
was made all the more difficult in this case by the complexities of the
underlying substantive law and voluminous record. Nonetheless, we
conclude that because each of the interconnected inferences urged by
the government is reasonable on the evidence as a whole, the District
Court erred in entering the judgment of acquittal, and accordingly we
70
will vacate that judgment and reinstate the jury verdict subject to the
District Court’s conditional grant of a new trial.31
31
Where a defendant has been acquitted on the ground of
insufficient evidence to support the conviction, and this Court vacates
the judgment of acquittal, the proper procedure is to reinstate the jury
verdict. See Coleman, 811 F.2d at 805; United States v. Dixon, 658
F.2d 181 (3d Cir. 1981). We do so here, although we recognize that
the District Court has already granted the Defendant a new trial
pending the outcome of this appeal. If the Defendant is retried
following our reinstatement of the verdict, “it will be the result of his
own motion for a new trial, and not a process imposed upon him by
the Government or this court,” Dixon, 658 F.2d at 187, and thus there
will be no issue of double jeopardy.
71