Opinion
Case No. 00-80794
June 19, 2002
MEMORANDUM AND ORDER
I.
This is a criminal case. On January 4, 2002, by written decision, the Court found defendant guilty of seven counts of perjury, in violation of 18 U.S.C. § 1623. The decision followed a three day bench trial (November 5, 6, and 19, 2001) and a day of closing argument (November 29, 2001). On May 20, 2002, the Court sentenced defendant to a 15 month custody term followed by two years of supervised release and fined him $1000.00. Now before the Court is defendant's motion for bond pending appeal, or in the alternative, to extend the date of defendant's surrender to July 15, 2002. The motion for bond pending appeal is DENIED. The motion to extend defendant's reporting date to July 15, 2002 is GRANTED. The reasons follow.
II. A.
Defendant asks for bond pending appeal on the grounds that his appeal, filed May 29, 2002, raises a substantial question, i.e. a "close question or one that could go either way." United States v. Pollard, 778 F.2d 1177, 1182 (6th Cir. 1985). Defendant claims that the Court made a functional equivalent of a finding of guilt prior to closing argument thereby effectively denying him of the right to a closing argument. Defendant relies on the authority of United States v. King, 650 F.2d 534 (4th Cir. 1981). In King, a magistrate judge stated unequivocally prior to closing argument that closing argument would not change his mind. This did not happen here. As will be described, the Court gave defendant a full opportunity to make closing argument and did not find him guilty until the completion of closing argument. Importantly, at no time did defendant's trial counsel (who is not defendant's appellate counsel) complain that he was not given a full opportunity to argue defendant's case and urge acquittal.
B.
This was not a simple case. The seven counts of the indictment charged that on different occasions during the course of a criminal trial, defendant, as a witness, knowingly made a material declaration which was inconsistent with a prior material declaration. Seven witnesses testified in the government's case and approximately 25 exhibits were received in evidence. Three witnesses testified in defendant's case and approximately 5 exhibits were received in evidence. Defendant filed a trial brief. The government filed a somewhat shorter trial brief. Defendant, at the conclusion of the government proofs, filed a memorandum in support of a motion for a judgment of acquittal.
III.
The trial record reflects the following:
— On November 6, 2001, following the completion of the government's proofs, defendant moved for a judgment of acquittal which the Court, with the acquiescence of defendant, took under advisement. At the same time, the Court requested of both counsel that they furnish the Court with the standard jury instruction on perjury. See Exhibit A.
— Before defendant took the witness stand, the Court questioned him regarding his understanding of his right not to testify and his further understanding of the probable guideline sentence should he be found guilty. See Exhibit B.
— On November 19, 2001, at the completion of the defendant's proofs, the defendant renewed his motion for judgment of acquittal which the Court again took under advisement. See Exhibit C.
— At the conclusion of the government's rebuttal and completion of the proofs, the Court again took under advisement defendant's renewed motion for judgment of acquittal. See Exhibit D.
— Following a short recess, the Court advised the parties of the issue as the Court saw it, i.e. the element of the crime: knowingly, and told defendant he could file a brief or have oral argument. The Court engaged in a colloquy with both government and defense counsel over its concerns as to the element of knowingly. See Exhibit E.
— On November 29, 2002, the Court heard closing argument. The argument runs 50 pages of transcript; defendant's closing argument runs approximately 20 pages of transcript. See Exhibit F.
— Following closing argument, the Court stated its reasons for finding defendant guilty. See Exhibit G. The Court first stated:
At the conclusion of the hearing on Monday, November 19th, the Court expressed in some rather garbled way its reaction to the testimony. The Court has listened very carefully to the final argument and has concluded that the interests of justice would be best served if it were to given its decision while the matter is at issue, the testimony and the arguments are fresh. The Court reserves the right to edit, if it chooses, the transcript which will be made of its remarks at this time.See Transcript of November 29, 2001 at p. 50.
IV. A.
A careful read of the Court's comments following the completion of the proofs, and the record as a whole, does not suggest that the Court made a functional equivalent of finding defendant guilty. What the Court said was that it was clear from the record that the defendant had made false statements but whether the government had established that defendant's statements were knowingly made was another matter. Prior to its statement, the Court had read the briefs by defendant and a brief by the government arguing their separate positions. The Court had heard three days of testimony and had read both the defendant's testimony at trial and his prior statements Whether the testimony and exhibits had, in the Court's view, established that the defendant's inconsistent statements were knowingly made — a critical element in the proofs necessary for a finding of guilty — was an open issue. In sum, the Court's comments made clear that it was undecided on the issue of knowingly and that the parties in closing argument should focus on the issue of knowingly and what was necessary in the proofs for the government to prove this element and the charges of perjury against defendant beyond a reasonable doubt.
Defendant was represented by very competent trial counsel. Defendant's trial counsel clearly understood that the knowingly issue was open and that it was his task to convince the Court the government's proofs were insufficient for a finding of knowingly beyond a reasonable doubt. The earnestness with which defendant's counsel made his closing argument demonstrated a belief by him that the Court's mind was still open to convince the Court that the government had not met its burden on a critical element. Only after fully considering the closing argument did the Court find defendant guilty.
A comparison of the Court's findings following closing argument and its written decision further support the fact that the knowingly element was the critical concern of the Court. The written decision amplified the proofs presented which justified the finding that the element of the perjury charge had been established beyond a reasonable doubt.
B.
In Herring v. New York, 422 U.S. 853 (1975), a case cited by defendant, the Supreme Court found that a New York rule of criminal procedure which gave a trial judge in a bench trial the discretion to deny counsel the right to closing argument was unconstitutional. The Supreme Court stated that the right to make a closing argument was fundamental:
It can hardly be questioned that closing argument serves to sharpen and clarify the issues for resolution by the trier of fact in a criminal case. For it is only after all the evidence is in that counsel for the parties are in a position to present their respective versions of the case as a whole. Only then can they argue the inferences to be drawn from all the testimony, and point out the weaknesses of their adversaries' position. And for the defense, closing argument is the last clear chance to persuade the trier of fact that there may be reasonable doubt of the defendant's guilt.
. . . .
This is not to say that closing arguments in a criminal case must be uncontrolled or even unrestrained. The presiding judge must be and is given great latitude in controlling the duration and limiting the scope of closing summations. He may limit counsel to a reasonable time and may terminate argument when continuation would be repetitive or redundant. He may ensure that argument does not stray unduly from the make, or otherwise impede the fair and orderly conduct of the trial. In an these respects he must have broad discretionHerring, 442 U.S. at 862 (citations omitted).
In King, supra, the magistrate judge immediately reviewed the evidence and found the defendant guilty after the parties rested their cases. The Court of Appeals for the Fourth Circuit found that under these circumstances defendant was deprived of the effective assistance of counsel, stating:
While this trial was not complex or lengthy, the need for closing argument was still compelling. As the Court recognized in Herring, 422 U.S. at 862-64, 95 S.Ct. at 2555-56, final argument serves several purposes: it clarifies and sharpens the issues, it gives the defense one last chance to persuade the trier of fact that there may be reasonable doubt of the defendant's guilt, and in the context of a nonjury trial, it aids the judge's decision-making process by providing the stimulus of opposing viewpoints. King was denied the opportunity to present her version of the facts through persuasive argument. With this vital part of the fact-finding process omitted, we cannot say the appellant received effective assistance of counsel.King, 650 F.2d at 536.
C.
The record here is not only distinguishable from King, it is different in kind. Defendant here was given, and in fact had, a full and complete opportunity to make closing argument and to attempt to persuade the Court that the government had not proven its case. The claim that the Court found defendant guilty before hearing closing argument is not "a close question or one that could go either way." This being the only reason asserted for bond pending appeal, bond pending appeal is not warranted. However, defendant's alternative request to extend the report date to July 15, 2002 in order to get his affairs in order is justified.
EXHIBIT A
A. No, I did not.
Q. At the time of the interview of Mr. Westenfelder were you particularly concerned with the appearance of Ms. Goldheit?A. No, I was not.
Q. And that's why it never made it into a report?A. That's correct.
Q. The excise tax returns that were filed by Cor-Bon that you received in the course of the investigation from the Cincinnati office, did they have any notation on them indicating that they were prepared by a CPA firm?A. No, they did not.
Q. So just from the face of those you didn't know whether the Westenfelder firm was involved in the preparation of those; is that correct?A. Not from the documents, no.
MR. ENGSTROM: No further questions.
MR. MULLKOFF: Nothing further.
THE COURT: You're excused.
Do you have another witness?
MR. ENGSTROM: If I could just have one moment to discuss this with the case agent.
THE COURT: Sure.
MR. ENGSTROM: Your Honor, the government rests.
THE COURT: Thank you. Is the defense ready?
MR. MULLKOFF: Judge, at this time I wish to podium and make a motion for —
THE COURT: You can make it from your table.
MR. MULLKOFF: Judge, pursuant to Rule 29(a) I move for a judgment of acquittal. The standard, of course, is that the Court shall dismiss the case, grant an acquittal at this juncture if the belief is that no reasonable trier of fact could conclude beyond a reasonable doubt that the defendant is guilty as charged.
THE COURT: I'll take the motion under advisement. If there's an obligation on my part to rule on the motion, I deny it.
MR. MULLKOFF: I don't think there is, Judge.
THE COURT: Well, it's always a question whether or not — I believe as the record stands, as I understand the law, the government has made out enough of a case to require defendant to go to his proofs. If you want me to go through the seven counts of the indictment and tell you why, I'll tell you.
MR. MULLKOFF: Judge, in the interest of moving things along and using the Court's time well, I wish to at this point merely focus on this, that as to the legal question, legal and factual questions here, my motion pertains to all seven counts.
THE COURT: I understand.
MR. MULLKOFF: With respect specifically to the first two counts, which are an entirely different standard than the last five, I do ask the Court to take it under advisement. I have prepared a memorandum in support of my Rule 29 motion, which I wish to submit to the Court.
THE COURT: That's fine. How about the other five counts?
MR. MULLKOFF: I will ask the Court to dismiss those counts applying the standard of Rule 29 —THE COURT: But you are not asking me to explain my ruling? You are not asking me to go through the counts and explain why I'm denying the motion?
MR. MULLKOFF: That's fair, Judge.
THE COURT: What?
MR. MULLKOFF: That's fair, Judge, yes, correct.
THE COURT: Okay. Do you have anything you want to add, Mr. Engstrom?
MR. ENGSTROM: No, Your Honor.
THE COURT: You know, it's your record, not mine.
MR. ENGSTROM: I understand, Your Honor. I think we're set.
THE COURT: Do you have the memo?
MR. MULLKOFF: Yes.
THE COURT: Have you given Mr. Engstrom a copy?
MR. MULLKOFF: I am going to walk right over to Mr. Engstrom. Here is an original and one.
THE COURT: Mr. Engstrom, at some point it would be helpful to me if you gave me, and maybe Mr. Mullkoff would agree with you, a copy from Devitt Blackmar of the standard jury charge on this crime.
MR. ENGSTROM: I can get that to you this afternoon if we're not —
THE COURT: Well, I'm leaving here at 3:00.
MR. ENGSTROM: I can get it to you this afternoon.
THE COURT: or you can get it from the law clerk. The books are right in the chambers.
MR. ENGSTROM: Thank you.
THE COURT: I just think it's helpful to a trier of fact in a bench trial to focus on what the jury would be told the law is.
MR. ENGSTROM: Okay.
THE COURT: Thank you.
MR. MULLKOFF: Judge, I am ready to proceed.
THE COURT: Go ahead.
MR. MULLKOFF: If I could have a couple of minutes to check the hall and to get my first witness together.
THE COURT: In front of me.
How many witnesses do you have?
MR. MULLKOFF: I believe five witnesses, Judge.
THE COURT: Raise your right hand.
— — —
LINDA BELISLE,
being first duly sworn by the Court to tell the truth, was examined and testified upon her oath as follows:THE COURT: Take the stand.
— — —
DIRECT EXAMINATION
BY MR. MULLKOFF: Q. State your name for the record.
A. Linda M. Belisle.
THE COURT: How do you spell your last name?
THE WITNESS: B-e-l-i-s-l-e.
BY MR. MULLKOFF:
Q. How are you employed?
A. I'm employed by Westenfelder, P.C.
Q. What do you do there?
A. I'm his office manager and also a staff accountant. electronic device put into his heart, which as I understand on a couple, three occasions has been need — or caused him some medical difficulties.
Q. That would be a defibrillator?
A. I don't know the exact term. I know that it keeps his heart running in sync.
Q. But other than those two incidents you're not aware of any disabilities that he suffers from?
A. or that he's a diabetic.
Q. Any other disabilities?
A. Not to my knowledge.
MR. ENGSTROM: I don't have any further Your Honor.
THE COURT: Thank you. You are excused, sir. Call your next witness.
MR. MULLKOFF: Lester Westenfelder.
THE COURT: Raise your right hand, sir.
— — —
LESTER WESTENFELDER,
being first duly sworn by the Court to tell the truth, was examined and testified upon his oath as follows:THE COURT: Sir, you understand that you are not obligated to testify?
THE DEFENDANT: Yes, I do.
THE COURT: And have you discussed this with Mr. Mullkoff?
THE DEFENDANT: Yes, I have.
THE COURT: And you are testifying of your own free will?
THE DEFENDANT: Yes, sir.
THE COURT: You know that if you did not testify Mr. Engstrom could not — I could not draw any inference from that adverse to you? You know, I couldn't say to myself, well, he didn't testify, there must be something wrong here? You know I can't do that?
THE DEFENDANT: I think I understand that.
THE COURT: Well, do you understand that; that the burden is on the government to prove you guilty beyond a reasonable doubt and you don' t have any burden in this case to prove your innocence?
THE DEFENDANT: I think I understand that.
THE COURT: Well, I don't want you to tell me you think you understand it. I want to know if you understand it. That when you get on the witness stand and you testify —
First of all, you've got to tell the truth, you know that?
THE DEFENDANT: Yes, sir, I do.
THE COURT: And you know one of the charges here is that you did not tell the truth in the previous trial?
THE DEFENDANT: Yes, I understand that.
THE COURT: And you know that Mr. Engstrom can cross-examine you?
THE DEFENDANT: Yes, sir, I do know that.
THE COURT: What?
THE DEFENDANT: Yes, sir, I do know that.
THE COURT: Do you also know that if you are found guilty by me that your sentence will be determined according to guidelines? Have you gone over that with Mr. Mullkoff?
THE DEFENDANT: Yes, sir, he went over that with me a few days ago.
THE COURT: And did he explain to you how those guidelines are computed?
THE DEFENDANT: Yes, I know that I can face jail time.
THE COURT: All right. But did you know that — I'm going to ask him this question, Mr. Engstrom, because I think it's important — that when those guidelines are computed they look at the offense you were convicted of and then you look in the book and see what the penalty is for that offense? You understand that?
THE DEFENDANT: Yes, sir.
THE COURT: You also understand that the guidelines provide that if I determine that you did not tell the truth when you testify that the offense level goes up? It's called obstruction of justice. Do you understand that?
THE DEFENDANT: Yes, sir, I do.
THE COURT: And you now want to testify voluntarily understanding all of the ramifications?
THE DEFENDANT: I want to talk to my attorney.
THE COURT: Thank you. We'll take a ten-minute recess, and Mr. Mullkoff, I want an explicit representation from you that you have explained the guidelines and implications and that there's a two-level increase for obstruction of justice.
MR. MULLKOFF: I understand.
THE COURT: And I want to know from you, Mr. Engstrom, that you have advised Mr. Mullkoff of the tentative computation under the guidelines for the offenses here charged.
MR. ENGSTROM: I'll put that on the record now. Yes, last week Mr. Mullkoff and I sat down with the guideline books and computed the guidelines as we anticipated they would apply based on different factors that may or may not —
THE COURT: Different adjustments in the offense level?
MR. ENGSTROM: Correct.
THE COURT: Depending upon the circumstances?
MR. ENGSTROM: Yes.
THE COURT: Thank you. Just so there's no misunderstanding. I don't want, you know, at some later date, sir, to have someone say to me, well, I didn't understand all of the ramifications. Do you understand what I'm saying?
MR. MULLKOFF: Can we have a ten-minute recess, Judge?
THE COURT: Sure. It's my obligation to do that. I want to see counsel in my chambers for after you get done.
MR. MULLKOFF: All right. (Recess from 10:25 a.m. until 11:02 a.m.)
THE COURT: Are we ready?
MR. MULLKOFF: Yes, Judge. At this time the defense wishes to call Dr. Jay Inwald.THE COURT: Go ahead.
MR. ENGSTROM: Your Honor, before we begin with this witness the United States has also —
MR. MULLKOFF: If I can approach the witness.
BY MR. MULLKOFF:
Q. So that there's no uncertainty about what you learned from her, I have given you a copy of the report of interview you have prepared. And does that in fact confirm your belief that she told you she started working for ATF in 1992?
A. Yes.
MR. MULLKOFF: Thank you. No other questions.
THE COURT: Mr. Engstrom?
MR. ENGSTROM: Just a point of clarification.
That's still on a separate record?
THE COURT: Yeah.
MR. ENGSTROM: No questions.
THE COURT: Do you have any further witnesses?
MR. MULLKOFF: No further witnesses at this time, Judge.
The defense renews it's Rule 29 motion.
THE COURT: The motion is taken under advisement.
We'll take a short recess, after which — excuse me, do you have any rebuttal?
MR. ENGSTROM: Yes, I do, Your Honor. I have
MR. ENGSTROM: Thank you, Your Honor.
THE COURT: Thank you.
— — —
DIRECT EXAMINATION
BY MR. ENGSTROM: Q. Agent Marion, do you know when Steven Dunn and Peter Pi testified before a grand jury in your investigation?
A. On July 18th, 2000.
MR. ENGSTROM: No further questions.
THE COURT: Who was that? What were those names?
MR. MULLKOFF: Dunn and Pi.
THE COURT: You can step down.
MR. ENGSTROM: No further witnesses, Your Honor.
MR. MULLKOFF: I renew my motion pursuant to Rule 29.
THE COURT: Well, it's not so easily disposed of, Mr. Mullkoff, like that. It seems to me, and I don't know whether you want to —
Well, let's do this. Let's take a five-minute recess while I get together with the other case and get those folks out of here.
(Recess from :11:56 a.m. until 12:07 p.m.)
THE COURT: Gentlemen, as I see it, there's only one issue for me to have to decide. The statute provides knowingly, and the instruction reads, defendant knew the statements were false when he gave the testimony. We tell a jury an act is done knowingly if it's done voluntarily and intentionally and not because of mistake or accident or other innocent reason.
As far as I'm concerned, the statements were false in his testimony, all of them. The grand jury I'll deal with separately, those two, but the statements at trial were false, he's admitted they were false, and they were material. It was the basis of his testimony that the acquittal was obtained, in my judgment reading the final argument.
The purpose of adding the word knowingly is to ensure that no one will be convicted for an act done because of mistake or accident or other innocent reason. I'm not impressed with the psychological testimony, that somehow he confabulated. I don't know why he testified the way he did at trial.
I'll give you an opportunity to file a brief, if you want it, or have oral argument on it. It's incomprehensible to me why he would have testified that way at trial. I personally think Mr. Dunn should be on trial here. The scapegoat was Mr. Westenfelder. Now, why he chose to walk into that courtroom and testify the way he did, I have no idea. There's no proof in this case other than his statements that he ever went out to Pi — what's the name of it?
MR. ENGSTROM: Cor-Bon, Inc.
THE COURT: Cor-Bon — Cor-Bon and checked records. There isn't an iota of evidence. He has no work papers, no documents. No one from Cor-Bon has testified. Mr. Pi has left him high and dry, not an iota of evidence to support his assertion that he ever went out to Cor-Bon and verified those sales, and the testimony that this form is somehow obscure is fatuous. As a matter of fact, if you look at Form 3 or Exhibit 3, the amended form, it says, "Previous edition may be used." There was no substantive change in the form at all, and there's no significant difference between all articles sold and sales price of articles sold. Those are synonymous terms.
So what I suggest that we do because of the seriousness of this is put it over for oral argument formally. I don't want to do it now. You can get these remarks, they are somewhat disjointed, but I'm not giving you anything more than the first thing that someone would say if they went into a jury room and started to discuss the evidence. The first juror out of the box would say all of that. But I don't know why he testified and I don't know whether he did it knowingly, but I haven't — I think that's a subtle point.
Do you have an explanation of why he did it, Mr. Engstrom?
MR. ENGSTROM: Well, I think when you go through a time line of events it's clear that he came in and manufactured the testimony in order to —
THE COURT: I don' t know that he manufactured it. See, that's a pejorative. He came in and he testified to something that didn't take place. He didn't remember Petroff when he talked to the agents. He didn't remember Petroff when he talked to the grand jury. He saw a form. Petroff wasn't even there then.
MR. ENGSTROM: No.
THE COURT: She wasn't there. And it's incomprehensible to me that anybody working for ATF would tell anybody, well, just include it on the sales, don't worry about it.
He's an experienced accountant. He knows excise tax returns and tax returns that have dates all have penalties associated with them if you don't file on time or you understate, or at least interest, and all of those conversations they were having, it was perfectly clear why they were having them because there were mistakes in the returns and ATE was a little compulsive saying I guess we'll charge interest for, at least at a minimum, the difference in the amounts reported because if you look at those returns they are sending them bills for less than $100, this is just my memory of it, $50. They are very careful. They are very compulsive about it. And that was the purpose for the calls.
Do you have anything you want to say now, Mr. Engstrom?
MR. ENGSTROM: I would say there are two reasons in the record. One is that he was testifying on behalf of his friend and a client and he did it to help that person out and —
THE COURT: Yeah, but he helped him more than did. He got him an acquittal.
MR. ENGSTROM: That's true. I think that's obviously one possible reason why he did it. The other possible reason is one I hinted at in the cross-examination of him. He had to testify in front of his client about the preparation of these returns, and in fear of the obvious negligence with which they were prepared by his office, he wanted to come up with an explanation to look better than he should under the circumstances.
THE COURT: But he obviously had to have some his mother conversations with Mr. Dunn before he went into the courtroom. Dunn didn't call him out of the blue.
MR. ENGSTROM: That's true, and as I, as I established, he had a relationship with Mr. Dunn that predated the representation —
THE COURT: Why would he go to bat for Dunn? Why would he go to bat for Dunn?
MR. ENGSTROM: People do things for many reasons. I can't, I can't speculate why he —
THE COURT: You are not expected to. I just thought you had a —
Mr. MULLKOFF, do you want to say anything?
MR. MULLKOFF: In my closing argument I do.
THE COURT: Not yet. I want to give you a chance to think about your closing argument in light of these comments.
MR. MULLKOFF: I appreciate that.
THE COURT: What? This is a pretty serious matter for him. Perjury is a very serious matter.
MR. MULLKOFF: It's the most serious matter Mr. Westenfelder has ever been involved in.
THE COURT: No, it's the most serious matter this Court has ever been involved in because if we can't rely on people who take an oath to tell the truth the system doesn't work, it just doesn't work, and he did not tell the truth in that trial. There's no evidence in this record at all that he ever went from his place of business out to Cor-Bon and checked records because if he did he would have had work records, documents for the computations, and there's no evidence in this record to support the conclusions that this form was obscure. As a matter of fact, he was aware of the form. He had seen the form before because he has clients that sell firearms. What you do for firearms is the exact same thing you do for this, no different. That's why I asked him that question because Mr. Engstrom had not asked him.
Am I correct?
MR. ENGSTROM: That's correct.
THE COURT: And I had picked that up from my reading of the record or maybe something he had said, that he had seen the form before.
There's another problem here, but I'm not going to put it on the record. I want to see you and Mr. Mullkoff in chambers for a minute. You'll get a date from Ms. Cassady tomorrow for the final argument.
(Proceedings adjourned at 12:15 p.m.)
— — —
INDEX
Government's Closing Argument 3
Defendant's Closing Argument 25
Government's Rebuttal Closing Argument 45
Findings of the Court 50
Certification of Reporter 62
— — —
MR. ENGSTROM: No, there wasn't.
THE COURT: Neither Mr. Dunn was called, Mr. Pi, nor any witness, anybody present at Cor-Bon, nor any work papers, memoranda, worksheets, any — may the Court take that into consideration in judging the credibility of Mr. Westenfelder's testimony?
MR. ENGSTROM: First, I would say that the Court should be clear I don't think you even need to take that into account in this case so I would prefer if you rule without even taking that into account.
THE COURT: Thank you, thank you.
All right. I'm going to — what?
MR. MULLKOFF: I'm just coming up to get my water.
THE COURT: At the conclusion of the hearing on Monday, November 19th, the Court expressed in some rather garbled way its reaction to the testimony. The Court has listened very carefully to the final argument and has concluded that the interests of justice would be best served if it were to give its decision while the matter is at issue, the testimony and the arguments are fresh. The Court reserves the right to edit, if it chooses, the transcript which will be made of its remarks at this time.
This is a criminal case. Defendant, an accountant, is charged with seven counts of perjury. Two of the counts relate to contradictions between defendant's testimony to a grand jury and in his testimony at a criminal trial at which his client, Peter Pi, personally and his client's corporation, Cor-Bon, was charged with evading excise tax on ammunition. These charges are brought under 18 U.S.C. § 1623(a) and 1623(c). The tax evasion consists of filing false tax returns — consisted of — the evidence mainly was false returns which understated taxable income. The other five counts relate to defendant's testimony at the trial itself, 18 U.S.C. § 1623(a).
Defendant, as to the first two charges, counts, argues essentially that the statements of the grand jury and the statements at trial are not irreconcilably contradictory as required for conviction. Defendant, as to the five remaining counts, argues that he did not knowingly make statements which were false in his testimony at the trial, an essential element to be proved by the government beyond a reasonable doubt for conviction.
The prior trial involves 16 counts of ammunition tax evasion. It occurred in April 2000. The government's theory at that trial, based on an audit and testimony of an ex-employee of Cor-Bon, was that the company and Peter Pi deliberately reported only 50 percent of its sales of ammunition in its excise tax returns to the Bureau of Alcohol, Tobacco Firearms, thereby significantly diminishing its annual tax liability.
The defendants responded that the low number of total sales listed on the returns was accurate because this defendant, Lester Westenfelder, interpreted the term total sales to only include total taxable sales. Thus, prior to preparing the returns all tax-free sales, that is, sales to law enforcement or educational facilities, were excluded from the total sales figure.
The defendant here, Lester Westenfelder, was called as a defense witness at the Cor-Bon trial. He presented fact testimony regarding his role as an accountant for Cor-Bon and specifically his preparation of the tax returns on behalf of Cor-Bon and that he went to the premises of Cor-Bon to verify the sales and that in his judgment, based upon his understanding of the tax return and his conversations with representatives from the Bureau of Alcohol, Tobacco Firearms, the tax returns accurately reflected net sales.
Peter Pi was acquitted. Cor-Bon was convicted of 15 of the 16 counts. An examination of the record in that case establishes that the testimony of Lester Westenfelder, defendant here, was material. This point is emphasized when one examines the final argument. He was a key witness in that trial.
As to this trial, the Court finds that the government has carried its burden of proof beyond a reasonable doubt and the defendant is guilty of each of the counts. The reasons follow.
As previously stated, the defendant was an essential witness for the defense in the Cor-Bon trial. It was his testimony that established the innocence of Peter Pi or the failure of the government to carry its burden.
In brief, he testified at that trial about talking to ATF personnel about tax returns when questioned, particularly he testified he talked to ATF personnel about the ambiguities in the return forms and the manner in which certain sales should be reported. He also testified, as previously indicated, of reviewing the records for his clients to determine the sales which were reported.
His statements to the grand jury and at the Cor-Bon trial were irreconcilable. To the grand jury and previously in an interview to agents the defendant here testified that he did not consult with ATF as to which sales should be reported and which should not be reported for taxing purposes. Particularly, when asked this question he told the grand jury, "I don't remember doing that personally, no." His testimony at trial on April 3rd, 2000, was to the effect that he talked to a Sharon Petroff of ATF, she sent him the forms, she sent him documents and was quite informative, and she told him how to go about reporting the sales, particularly the sales for 1991 which had not previously been reported.
"Q. Mr. Westenfelder, it's your testimony today that you had extensive conversations with Ms. Petroff; is that right?
"A. There were many, and they generally lasted about ten minutes."
That's directly contradictory to what he told the grand jury.
Count Two. He was asked to explain his function in relation to the tax returns. His answer was, "We didn't have privy —
"A. Well, the tax returns were based upon sales at the time. Some of the sales were exempt sales and some were not. We didn't have privy to that because all of his work was done internally on his own computer [meaning Peter Pi]."
He testified he didn't know the answer to the percentage of sales to law enforcement. In his trial testimony on April 13th, 2000:
"Q. After reviewing the documents from Cor-Bon after you filed the quarterly tax returns, did you know how much of the ammunition was going to law enforcement?
"A. I would have to say the answer would be yes, I would know that."
Irreconcilable as to what he told the grand jury.
As to his testimony at the trial itself, he testified that ATF Agent Gary Marion came to his office and served him with a subpoena.
"Q. Before he left your office the first time did he say anything to you?
"A. Well, yeah, we talked extensively about what was required. When he left I got rather frightened. He said Peter Pi is guilty of excise tax evasion, I expect your full cooperation. He leaned over the table and he said, "If you don't cooperate, you're going to go down with him.'"
The subpoena was served two years approximately before Agent Marion and the defendant ever met. His statement at trial was material because it tended to support the defense's theory that ATF was overbearing, and it was directly — it was simply not true. The subpoena had gone there two years earlier. He wasn't even present when the subpoena was served.
Count Four, trial testimony.
"Q. Mr. Westenfelder, did you ask Sharon Petroff how to fill out the ammunition tax returns?
He gave an extensive answer regarding his contact with her. He said that he was assured they were going to be receiving a field audit.
"Q. So you were waiting for the ATF audit to start; you were waiting for ATF to come in and start an audit?
"A. Yes, she assured us that that would happen. She always said don't worry about it," et cetera.
The fact is that he never had a conversation with Sharon Petroff because she was not involved with Cor-Bon's tax returns in the spring of 1992 when this conversation which he was describing took place. It was important for him in that conversation to identify somebody in particular and in detail to establish a reason for the manner in which the returns were handled. That testimony was clearly false.
Count Four. I'm sorry, did I skip Count Three? No.
Count Five.
"Q. Let's start off with a question: You talked with Sharon Petroff and what did she tell you about what goes on those returns?
"A. Well, she said it was confusing and not clear as to how the instructions were written, and I agreed to that."
That testimony is inherently incredible. He did not talk to Sharon Petroff, the statement simply was not true, and no one from ATF would have told him that it was confusing and not clear. Yet this offered an excuse in his testimony in the principal trial of Cor-Bon to justify the fact that the manner of reporting taxable sales was not clear.
Count Six.
"Q. Mr. Westenfelder, I'm going to hand you back Government's Exhibit 35. Now, this shows that there was no return filed for the first three quarters — actually, it's the last three quarters of 1991. Was that because you weren't aware of the tax at that time?
"A. Well, at that time in 1991, we were not aware of the tax. But beginning, but beginning of 1992, because I was speaking to her in 1992 [Sharon Petroff], she wanted all four quarters filed for 1992. What she told us to do is on the first quarter of 1992, is to include all sales for the year of 1991, and we did that."
"A. . . . under the specific direction of Sharon Petroff of the Pennsylvania office who was receiving our returns. That's what she told us to do. She said, we're not going to charge you a penalty for 1991 because we understand the circumstances. File it in 1992, first quarter, pay the tax and we'll start afresh."
That conversation with Sharon Petroff never took place. Sharon Petroff testified here today — in this trial, not today — in the course of the trial that she did not have such a conversation. The testimony was clearly false.
Count Seven. Trial testimony:
"Q. Okay. I'd like you to take a look at where I'm pointing here. It says, `taxable category.' What did you understand that to mean?"
This has reference to the ATF — bear with me a moment — Form 5300.26.
"A. The taxable category is all the items in the particular category which are subject to tax."
"Q. That would exclude — in your mind, that would exclude tax-free sales?"
"A. Yes, In my mind, and per instructions.
"Q. Instructions of Ms. Petroff?
"A. That's correct."
And so on. That testimony the Court finds is false for two reasons:
One, the form is an unexceptional form. It calls on Line 6 for total sales. It calls for, Line 7, sales excluded on Line 6 from imports, Line 8 less. So you conform Line 6 — you take Line 6 and Line 8 less tax-free sales, 9, 10, 11, 12, 13, 14, net taxable amount. The testimony that that was confirmed by ATF, that Line 6 should include only the sales subject to tax, was clearly false.
The claim that ATF Form 5300.26 is confusing is frivolous, as just explained.
The only factor which causes — the only element of proof, required proof — let me go back. Strike that.
To obtain a conviction under the statute, the government must establish that the defendant made a false material statement, as detailed in the indictment, during that testimony. The Court has so found. Defendant knew that the statements were false when he gave the testimony. Knowing has been defined in this circuit in United States v. Lawson, 780 F.2d 535, as follows:
"The word `knowingly' means that defendant realized what he was doing and was aware of the nature of his conduct. It means that he did not act through ignorance, mistake or accident. Knowledge may be proved by the defendant's conduct and by all the facts and circumstances surrounding the case."
Defendant was not ignorant of what he was being asked or what had occurred. Defendant did not make a mistake. Initially in his interview February 26, `97 and again in his grand jury testimony he stated that he did not have any conversations, that everything was done at Cor-Bon, and all did he was — all his office did was take the figures by telephone or by fax, put them on the return, then the return was sent. And it was not an accident. His testimony is inherently incredible. Coupling the facts as they occurred and the circumstances surrounding the case, the Court finds that the second element, knowingly, has been established.
It is for these reasons that the Court has found the defendant guilty as charged on all counts. The defendant's bond may continue.
Mr. Mullkoff, you will arrange for an interview with probation tomorrow.
MR. MULLKOFF: Yes, Judge.
THE COURT: Thank you.
MR. MULLKOFF: Thank you.
THE COURT: I want to add something to this. In opening argument the government stated that there are several reasons why someone may make a false statement in the circumstances where they have taken an oath: One is simply to get a reaction out of somebody; second is low self-esteem; third is to protect a friend or family member; fourth is to protect oneself when one's integrity is under suspicion.
The defendant here was called to the witness stand by a friend. His friend was in deep trouble. His friend was represented by his personal lawyer. He went into that courtroom and attempted to help his friend. He had to know that what he was saying in that courtroom was not true because what he was saying did not conform to the facts as they had occurred during the course of the relationship when the returns were there in question. He did not make a mistake when he testified in that courtroom, it was not an accident, and he was not ignorant.
Defendant has suggested that he may have confabulated because of an accident or a cognitive deficiency caused by being comatose for a period of time after being under anesthesia. There's no reason for him to have confabulated. That testimony — confabulation is simply not supported by the record. There is no record in the medical records that he suffered from any serious mental disorder that would allow him, excuse him, or escape the fact that he was knowingly telling a story or giving testimony that was not true.
Thank you. We're in recess.
(Proceedings concluded at 4:57 p.m.)
CERTIFICATION
I, Sheri K. Ward, official court reporter for the United States District Court, Eastern District of Michigan, Southern Division, appointed pursuant to the provisions of Title 28, United States Code, Section 753, do hereby certify that the foregoing is a correct transcript of the proceedings in the above-entitled cause on the date hereinbefore set forth.