Petition — Browning v. United States

‘fice -Supreme

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80-1682

No.

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IN THE 22 ;

Supreme Court of the Mnited States

OCTOBER TERM 1980

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vy

JOHN VAL RROWNING,

Petitioner,

VS.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

ELKAN ABRAMOWITZ

Counsel for Petitioner

OBERMAIER, MORVILLO & ABRAMOWITZ, P.C.

1290 Avenue of the Americas

New York, New York 10104

(212) 489-1500

ADAM E. RITHOLZ,

Of Counsel

April 6, 1981

APR 6 1981

E D

S TEV AS,

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Questions Presented

Can interference relating only to an immaterial matter

constitute “obstruction of the proceedings” within the

meaning of 18 U.S.C. §1505?

Can the counseling of the literal truth and the suggestion

not to volunteer unrequested information amount to

“obstruction of the proceedings” under Section 1505?

Is a routine inquiry, without fair notice of an “investi-

gation,” a “proceeding” under Section 1505?

TABLE OF CONTENTS

PAGE

NOU Ss oy ww ke wh ce ee ee eeeus i

ns. a ae acu wa 6 Gs mate are ate 1

oat ee ee ir ie ie sae 1

STATUTE AND REGULATION INVOLVED .............0-. 2

STATEMENT OF THE CASE .......cccccccuscccccece 3

A. Proceedings in the Lower Courts ............ 3

B. The Offense ..............ccccccccccvceee 4

1. Introduction ......... 0.0... cc cee eee eee 4

2. The Importations and the

Special Customs Invoice ............... 5

3. The “Inquiry” by Customs ................ 6

REASONS FOR GRANTING THE WRIT ............000- 9

A. The Evidence is Insufficient to Sustain the Convic-

tion for Obstructing the Customs Inquiry Because

the Defendant’s Advice Related to an Immaterial

Matter ...... cece cee ee eee eee ee eee 9

B. The Literal Truth was Counseled by Petitioner and

Furnished to Customs, Thus Voiding a Notion of

“Obstruction” ...... cece eee eee eee ees 1]

C. Petitioner Could Not Reasonably Have Assumed

that the Inquiry by Customs Was a “Proceeding”

within the Meaning of 18 U.S.C. §1505 ........ 14

eer 17

APPENDIX:

Opinion of the Court of Appeals ................20.. la

Judgment of the Court of Appeals .................. 17a

Order Denying Petition for Rehearing ............... 19a

Special Customs Invoice Form 5515 ................ 20a

iii

PREVIOUS PAGE WAS BLANK

iv

TABLE OF AUTHORITIES

Cases:

PAGE

Bronston vy. United States, 409 U.S. 352 (1973)

PP Ae re ee Pee ea eee 7-42; 1m ty 15

Foster v. United States, 265 F.2d 183 (2d Cir.), cert.

denied, 360-UWS. GI CUPS) ac ee ei eewenweeuns 10

Rice v. United States, 356 F.2d 709 (8th Cir. 1966) .... 15

United States v. Alter, 482 F.2d 1016 (9th Cir. 1973) .. 13

United States v. Batten, 226 F. Supp. 492 (D.D.C., 1964),

cert. denied, 380 U.S. 912 C1ISGS) wn cacccepucees 15

United States v. Browning, 572 F.2d 720 (10th Cir.), cert.

Gated, 457 We. Cal CAPTO? 6 ck vee wees denene 4, 14

United States v. Carzoli, 447 F.2d 774 (7th Cir. 1971),

cert. denied, 404 UB. 1053S CISTZ) acscccsccccess 15

United States v. Fruchtman, 421 F.2d 1019 (6th Cir.),

cert. denied, 400 U.S. 849 (1970) .............4-. 15

United States v. Kraase, 484 F.2d 549 (7th Cir. 1973) .. 13

United States v. Poutre, Slip Op. No. 79-1193 (1st Cir.)

Se Dee SE a Fare en ee aeRO Eee 13

United States v. Ryan, 455 F.2d 728 (9th Cir. 1972) .. 10, 11

United States v. Vixie, 532 F.2d 1277 (9th Cir. 1976) .. 15

Statutes:

BO aces ee Ea aloe ae anon ANE a re kos 3

EO SA es Se Gee ee as 2, a» % 44, 25

Miscellaneous:

Treasury Department Notice of Intention to Delay Require-

ment of Revised Customs Form 5515

Federal Register, April 19, 1965, at 5862 .......... a, 6

IN THE

Supreme Court of the Wuited States

OCTOBER TERM 1980

JOHN VAL BROWNING,

Petitioner,

VS.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

The petitioner, John Val Browning, prays that a writ of

certiorari be issued to review the judgment of the United States

Court of Appeals for the Tenth Circuit filed in this case

(No. 79-1893 below) on November 14, 1980, affirming the

district court judgment of conviction.

Opinion Below

The opinion of the Court of Appeals, affirming conviction,

is officially reported at 630 F.2d 694 (10th Cir. 1980) and is

printed along with the order denying the petition for rehearing,

in the Appendix to this petition.

Jurisdiction

The judgment of the Court of Appeals was entered on

November 14, 1980 (A. 17a). A petition for rehearing with

a suggestion for rehearing en banc was denied on February 5,

1981. (A. 19a).

2

The jurisdiction of this Court is invoked under 28 U.S.C.

§1254(1).

Statute and Regulation Involved

Title 18, United States Code §1505:

Ҥ1505. Obstruction of proceedings before departments,

agencies, and committees.

“Whoever corruptly, or by threats or force, or by any

threatening letter or communication, endeavors to influence,

intimidate, or impede any witness in any proceeding pending

before any department or agency of the United States, or

in connection with any inquiry or investigation being had

by either House, or any committee of either House, or any

joint committee of the Congress; or

“Whoever injures any party or witness in his person or

property on account of his attending or having attended

such proceeding, inquiry, or investigation, or on account

of his testifying or having testified to any matter pending,

therein; or

“Whoever, with intent to avoid, evade, prevent, or ob-

struct compliance in whole or in part with any civil inves-

tigation demand duly and properly made under the

Antitrust Civil Process Act or section 1968 of this title

willfully removes from any place, conceals, destroys, muti-

lates, alters, or by other means falsifies any documentary

material which is the subject of such demand; or

“Whoever corruptly, or by threats or force, or by any

threatening letter or communication influences, obstructs,

or impedes or endeavors to influence, obstruct, or impede

the due and proper administration of the law under which

such proceeding is being had before such department or

agency of the United States, or the due and proper exercise

of the power of inquiry under which such inquiry or in-

vestigation is being had by either House, or any committee

of either House or any joint committee of the Congress—

3

“Shall be fined not more than $5,000 or imprisoned not

more than five years, or both.”

* * *

Treasury Department Notice of Intention to Delay Require-

ment of Revised Customs Form 5515.

Federal Register, April 19, 1965, at 5862.

On February 27, 1965, the Bureau of Customs published

a notice of a public hearing regarding revisions in customs

Form 5515, Special Customs Invoice Form, which is

employed pursuant to §8.15 of the Customs Regulations

(19 CFR 8.15).

As a result of comments and suomissions received at that

hearing, the Bureau of Customs has determined that further

revision of the form is desirable. Pending this revision,

collectors of customs will accept either the previous edition

of customs Form 5515 (without questions 8 and 9 under

section V), or the current edition of customs Form 5515,

but shall not require that either questions 8 or 9 in section V

be completed.

Statement of the Case

A. Proceedings in the Lower Courts

This action began on March 30, 1976 with the filing of a

three-count indictment in the United States District Court for

the Eastern District of Missouri, naming as defendants the

Petitioner, at the time president of Browning, Inc., along with

that company and its subsidiary, the Browning Arms Company,

importers of sporting arms manufactured abroad. Counts I and

II charged that with knowledge of an ongoing United States

Customs Service investigation, the defendants obstructed the

due and proper administration of the customs laws by advising

exporters to give misleading and incomplete answers to the

Customs Service, in violation of 18 U.S.C. §1505. Count III

charged the defendants with making “false statements” on in-

voices accompanying imported rifles in violation of 18 U.S.C.

4

§542. The essence of all three counts was the conceded omission

from the importing documents of the payments of assists made

by Browning Arms to the exporters throughout the years.

The case was transferred to the District of Utah in May, 1976,

and on August 16, 1976, the indictment was dismissed. The

government appealed to the United States Court of Appeals for

the Tenth Circuit, and on March 14, 1978, the judgment of the

district court was reversed. United States v. Browning, 572 F.2d

720 (10th Cir.), cert. denied, 439 U.S. 822 (1978).

On April 19, 1978, the Browning companies entered pleas of

nolo contendere to Counts II and III of a superseding indict-

ment before District Judge John F. Nangle, in the Eastern

District of Missouri, who imposed fines on the corporations

totaling $10,000.

The trial by jury of Petitioner began on May 29, 1979 before

Hon. Bruce S. Jenkins, United States District Judge for the

District of Utah. After four days of deliberations, the jury re-

turned verdicts of guilty on Count I and not guilty on Counts II

and III. Petitioner was sentenced to a term of imprisonment of

two years, execution suspended, and the maximum fine of

$5,000. Petitioner was placed on probation for two years and

ordered to pay the costs of prosecution in the approximate

amount of $13,000.

Petitioner appealed to the Court of Appeals for the Tenth

Circuit, which affirmed judgment of the district court on

December 14, 1980, United States v. Browning, 630 F.2d 694

(10th Cir. 1980), (A. la-16a). On February 5, 1981, Peti-

tioner’s request for rehearing with a suggestion for rehearing

en banc was denied. (A. 19a).

B. The Offense

1. Introduction

John Val Browning worked for the parent corporation bearing

his respected family name for 29 years, the last 15 of which

5

serving as President and Chief Executive Officer. The Browning

name has appeared on sporting and military arms and one of its

principal activities was importation of quality sporting arms

manufactured abroad according to design specifications fur-

nished by Browning. This case concerns the importation of the

relatively inexpensive .22 caliber semi-automatic rifle manufac-

tured for many years until 1970 by Fabrique Nationale d’Arms

de Guerre (“FN”), a noted Belgian firearms concern.

The government contended that for almost two hundred

separate shipments involving thousands of rifles during approxi-

mately six years in the 1960’s, the stated invoice price of the

.22’s did not accurately reflect the true value of the rifles because

FN was invoicing and receiving supplementary payments not

reflected in the invoice price. Further, it contended that the

defendant “obstructed” the attempt of the Customs Service to

reconstruct the value of the rifles years later by counseling FN,

in response to its request for advice, not to disclose the fact that

these payments were made. The defense maintained that the

separate payments constituted legal “assists,” the disclosure of

which Browning and FN believed was not required under an un-

equivocal Treasury Regulation to that effect. The belief was

fostered by the toleration by Customs of this practice, since the

answer concerning assists on the Special Customs Invoice (See

A. 20a) was left blank on each of the two hundred shipments.

Moreover, four years after the last assist was paid to FN, the

Customs Service was able substantively to reconstruct the value

of the rifles from truthful responses to its inquiries of FN and

Browning concerning the actual costs of the rifle.

2. The Importations and the

Syecial Customs Invoice

The rate of duty for rifles under $25 and over $50 is lower

than the rate for those between the two amounts. During the

mid to late 1960’s, the Browning .22 caliber semi-automatic

rifle manufactured by FN, if priced over $25 would not have

been competitive with domestically manufactured .22’s.

6

“Assists,” defined by the Customs Service as payments by

importers to exporters for items such as tooling, design, but also,

all other ‘financial assistance,” constituted a mutually acceptable

method between FN and Browning to compensate FN for its

rising costs while maintaining the invoice price of the .22 semi-

automatic at a competitive $24.95. Thus, Browning Arms

agreed with the principals of FN to make these payments and

did so continuously atic openly from approximately 1964 until

1970.

Obviously aware that assists paid by importers to exporters

might cause a disparity between the actual value of a dutiable

item and its invoice price, the Service in 1965 amended its

“Special Customs Invoice Form 5515” to require disclosure of

all assists not included in the invoice price. Of course, if Customs

insisted on such disclosure, by requiring answers to Questions

8-A on the new Form 5515 (A. 21a), the payments being

made by Browning Arms to FN would have come to the atten-

tion of Customs with each shipment. However, compliance with

Question 8 on Form 5515 was never enforced by Customs

because the Treasury Department published a Notice of Inten-

tion to Delay Requirement of Revised Customs Form 5515 in

April, 1965, explicitly stating that Question 8 did not have to

be answered.* Certain of their belief that the assists did not have

to be disclosed to Customs, FN continued exporting the .22’s

with an invoice price of $24.95, leaving Question 8 blank on

each of the nearly two hundred shipments through 1970, with-

out a question from Customs.

3. The “Inquiry” By Customs

In the Spring of 1970, Browning Arms shifted the manufacture

of the .22 rifle to the Miroku Firearms Company in Japan, where

it was produced less expensively. At around the same time,

Browning Arms learned that the rate of duty could be reduced

by importing rifles in parts rather than fully assembled. Customs

employees visited the Browning warehouse in December, 1970,

*The Notice is reprinted on p. 3 of this Petition, supra.

7

to confirm the new procedure relating to the unassembled guns.

Presumably satisfied that the parts were being imported prop-

erly, a Customs official for the first time, in a follow-up letter,

raised the question of assists. He wrote, in part:

... [I]t has been noted that Section 5, number 8 of the

Special Customs Invoice has not been completed. This

portion of the form pertains to assists. Does your company

furnish the manufacturers in Belgium or Japan with any

assists such as... tooling . . . design and development or

financial assistance .. . ?

The letter, without question, sought disclosure of information

explicitly and unequivocally permitted by the Treasury regulation

to remain undisclosed. The defendant responded that he believed

that Question 8 did not have to be answered and that he was

confused by the request. In a later letter, Browning reiterated his

confusion over the question and repeated a request made in his

earlier letter for Customs to call and advise him “in detail to the

proper procedure to be followed in the future as well as any

adjustments we must make for the past. . . .” No such call was

forthcoming.

This correspondence occurred over a two-year period, and in

the Fall of 1973, a Customs representative assigned to Europe

had prepared an extensive list of questions for FN concerning

its exporting practices with Browning. FN’s response took aearly

eight months to complete, with Customs placing no particular

time pressures or restrictions on whom to contact.

Two of the thirty-three questions dealt with the period 1970-

1971, when FN was phasing out the manufacture of the .22

semi-automatic and allowed the price to rise from $24.95 in

several increments, ending at $51.25. The questions essentially

were: (1) why the “dramatic increase”; and, (2) if, as Brown-

ing Arms had indicated, the $24.95 price had been a negotiated

one, what was the dollar amount of cost omitted from the price

over the years. Despite the government’s argument to the con-

trary, the answers given were indisputably truthful and totally

8

responsive. First, FN confirmed that the $24.95 price was way

below the actual cost of the rifle and was kept there by mutual

agreement with Browning Arms because, if allowed to rise, “duty

above that level effectively would kill sales of this rifle.” Second,

FN furnished the actual cost figures of the rifle from the mid-

sixties to 1971; the average cost per rifle over the years was

approximately $40.00. In short, Customs not only obtained ex-

actly what it asked for, it obtained exactly what was necessary

and material in order to claim revaluation of the .22 semi-auto-

matics on the basis of true cost (as opposed to invoice price).

Customs was not told that assists in the form of supplemental

payments were paid to FN over the years because the fact the

payments were made did not affect the cost of manufacturing

the rifle. Since it was value which was the material inquiry and

because it was cost that was asked for to determine value, the

answers as given were complete; disclosure of the supplemental

payments would have been gratuitous.

As one of the people whose advice FN sought in preparing

its response, the Petitioner concurred in FN’s decision not to

disclose the payments. Browning spoke with FN by telephone

and reiterated his belief that the payments, at least at that point

and on the basis of the questions asked, did not have to be

disclosed. He acknowledged that if Customs squarely asked for

the payments, they would have to be told of them, but he was

concerned in that event about what they should be called; he

thought the expression “side payments” crude and dangerous.

It is true that he speculated that if the payments had to be dis-

closed, the labels placed on the “side payments” might have to

be changed.

However ill-advised the defendant’s musings were, the fact

remains that his conversation constituted mere speculation as to

a course of conduct should the question of the payments be

asked. No new characterizations were in fact furnished because

Customs never asked FN about the payments. Consequently,

the Customs inquiry was not delayed, impeded or affected in

any way. As such, the defendant’s contemplations remain just

9

that, and cannot support the criminal charge of obstructing the

proceedings.

Reasons for Granting the Writ

Each of the issues presented by petitioner is of importance to

the future administration of federal criminal law. The first issue

presented is whether criminal sanctions should be imposed for

the alleged “obstruction” of information which was substantively

already in the possession of the government, and which, in any

event, was not material to the specific inquiry. The second is

whether the concept of Bronston v. United States, 409 U.S. 352

(1973), dealing with literal truth, should be applicable to the

facts of this case. The third is whether the unwarranted and

unprecedented elevation of the informal and leisurely question-

ing of a foreign corporation amounts to a “proceeding” under

18 U.S.C. §1505.

A. The Evidence is Insufficient to Sustain the Conviction for

Obstructing the Customs Inquiry Because the Defendant’s

Advice Related to an Immaterial Matter.

The clear purpose of the 1974 inquiry was to gather infor-

mation from FN to enable Customs to revalue and recalculate

the duty on rifles imported ove: the years at what it believed

was an unrealistically low price. Here, Customs knew prior to

the inquiry that the cost of the rifle exceeded the invoice price

and that the latter was a negotiated ceiling, calculated not to

make a profit, but to keep the duty low. Price, it felt, was not

reflective of true value; cost would be. Therefore, it was the cost

which it needed, wanted and asked for. Knowledge of any

inducements paid to FN over the years to keep the price low

simply was unnecessary to this method of revaluation. In this

context then, the supplemental payments are totally immaterial;

the costs are the costs regardless of the payments received.

In short, Customs was supplied with the information neces-

sary to complete the investigation. This is borne out by the fact

10

that the discovery later that side payments had been made in no

way affected the revaluation process. The only use the govern-

ment was able to make of this information was to form the

basis of the criminal charge which is the subject of this petition.

A conviction on similar facts was reversed by the Ninth

Circuit Court of Appeals in United States v. Ryan, 455 F.2d 728

(9th Cir. 1972). Prior to the issuance of subpoenas, the defen-

dant, who was under a grand jury investigation for income tax

evasion, had instructed his secretary to destroy membership

cards of a club showing a certain third party to have been the

benefactor of many members; he did not instruct her to destroy

membership applications containing the same information. After

the subpoena—calling for these and all other records of the club—

was served, the defendant instructed the secretary to continue to

destroy the membership cards, Finding that the destruction of

these records did not constitute obstruction of justice because

the benefactor’s largesse had no bearing on the income tax liabil-

ity of the defendant, and further, because the applications pro-

vided the government with the same information contained on

the destroyed cards, the court held there can be no obstruction

when the hidden information is immaterial to the inquiry. It said:

“The burden of proof was upon the government to prove

that the production of the membership cards would throw

some light on the subject of the grand jury investigation.

Foster v. United States, (265 F.2d 183 (2d Cir.), cert.

denied, 360 U.S. 912 (1959)]. It offered no proof,” 455

F.2d at 734.

This import of this case is clear: regardless of the conduct, be

it destruction of records or advising a respondent how to answer

a question, the government must show that the defendant’s

actions relate to a matter which was material to the proceeding;

if not, the government has failed to prove a charge of obstructing

that proceeding.

Here, as in Ryan, the burden of proof was on the government

to prove that disclosure of the supplemental payments “would

11

throw some light on the subject” of costs. It did not and could

not do so. The information bore no relevance to the Customs

inquiry and was, in fact, never requested. As much as the prose-

cution attempted to point its finger in shame at the defendant

for “concealing” the payments, the fact is that the government

was unable to, and did not, explain how that conduct stalled,

thwarted, hindered, or impeded Customs in any way in their

revaluation of the rifles. In short, the act of advising concealment

of the payments, as with the act of destroying the membership

cards in Ryan, was nothing more than a side issue to the real

purpose of the inquiry, and despite the attempts to bolster the

wickedness involved, the assertedly offensive conduct was ir-

relevant to the real concern of Customs.

This Court should review—and speak to—the misuse of the

criminal obstruction statutes to fashion a crime out of the decision

not to disclose obviously immaterial information.

B. The Literal Truth was Counseled by Petitioner and Fur-

nished to Customs, Thus Voiding a Notion of “Obstruc-

tion.”

Since Customs did not ask for the payments specifically and

since they were immaterial to the inquiry, the answers here which

omitted the payments were, in fact, totally truthful. As such, a

charge of “obstruction” should not lie for advice not to volunteer

unrequested information.

The rationale of Bronston v. United States, 409 U.S. 352

(1973 )—held inapplicable by the courts below—should be disposi-

tive in this case. In Bronston, this Court reversed the defendant's

conviction on the ground that the charge of perjury does not

reach a literally true answer, even if the witness intends to mis-

lead his questioner by the answer and even if the answer, whether

phrased in the negative or in the affirmative, is arguably “false by

negative implication.” 409 U.S. at 361. The Court reasoned that

to the degree that a literally true answer is unsatisfactory, it

12

should “alert [the examiner] to press on for the information he

desires .. . or reframe his initial question with greater precision.”

Id. at 362.

The reasoning of Bronston is sound. If literally truthful an-

swers to broad and unspecific questions are held actionable,

every citizen in this era of growing bureaucratic inquisitiveness

faces the potential of harassment by piqued officials, who later

could claim that the respondent should have realized what level

of completeness was expected originally. Such power can lead

to serious abuse and would further no legitimate governmental

aims, especially when, as in Bronston, supra, and as in this case,

the scope and direction of the questioning, and the ability to

proffer follow-up questions if the answer is deemed incomplete,

rests totally in the hands of the government. Whatever the harsh

consequences of lying or counseling someone else to lie to the

government should be, no such consequence should flow from

furnishing the truth, even if the truth is deemed to be incomplete.

In the latter case, the burden should shift to the questioner to

focus and delve.

Here, the later-discovered fact that supplemental payments

were furnished FN over the years was used by the prosecution,

in effect if not in intent, to create a wholly imaginary harm to

the 1974 inquiry. Information about the payments have not been

used in any substantive way by Customs, except for purposes of

these proceedings. Perhaps annoyed by Browning’s suggested

technical formulations to Customs’ imprecise questions, but also

perhaps embarrassed at the laxity of enforcement over the years,

the government, with hindsight, was permitted to urge that

FN’s answers, with Browning’s advice, were criminally incom-

plete. Such unrestrained power to recast the nature and context

of the question—to infer new meaning to words not readily ap-

parent at the time—is precisely the vice and potential for govern-

mental abuse Bronston seeks to eliminate.

The rationale of Bronston stands in stark contrast to the

facile, imprecise and dangerously vague definitions of “obstruc-

tion” offered by the government below:

13

“In our system of justice, we rely upon the citizen to be

honest and forthcoming with law enforcement investiga-

tions. When they are not, they obstruct justice.”

“A truthful answer which purposely conceals facts ob-

structs an investigation, even if it is not a lie.”

The Bronston decision speaks precisely to these simplistic

generalizations, which permit the prosecution to use obstruction

statutes against those thought not to be as “forthcoming” as an

investigator might like, regardless of what precise question was

asked, how it was answered, or whether the answer the govern-

ment later claims to have been looking for was material to the

investigation.

The government urged throughout the trial, and the prosecutor

stressed in his summation, that during the investigation in 1974,

the defendant caused FN to furnish “half-truths,” concealing the

“truth about the supplementary payments.” The defense main-

tained throughout that the answers furnished to Customs by FN,

and the defendant’s concurrence in them, were truthful and

responsive to the actual questions propounded; the fact that the

payments were not disclosed was a function, not of the suppres-

sion of a required answer, but of the way the question was drawn.

In short, the defense maintained there was no lie counseled or

perpetrated. With this issue so sharply cast, it was crucial for

the jury to be told the legal significance of furnishing the “literal

truth” in response to a government question. In this setting,

therefore, the failure of the District Judge to include a requested

instruction under Bronston was error worthy of review by this

Court.

There is no reason in logic or precedent to limit the Bronston

doctrine to perjury cases, and in fact its teaching has been applied

to other charges in the First, Seventh and Ninth Circuits. See,

United States v. Poutre, Slip Op. No. 79-1193 (1st Cir.), Decem-

ber 31, 1980; United States v. Kraase, 484 F.2d 549, 552 (7th

Cir. 1973). Cf., United States v. Alter, 482 F.2d 1016, 1027

(9th Cir. 1973). The rationale of Bronston should apply to all

14

situations where the scope and direction of the questioning is in

the control of the government, whether the charge is perjury, or

false statements, or obstruction of the proceedings.

The Bronston doctrine is clearly applicable to the facts of this

case. Here, the two questions—why did the price rise and what

was the true cost of the rifle—were answered truthfully. Since the

government knew $24.95 was a negotiated price and not based

on costs, it certainly could have asked directly if any induce-

ments were given FN to keep the invoice price below $25.00;

those questions absolutely would have required disclosure of the

payments. The open-ended and broad question, “why?”, invited

the limited and circumscribed answer and mandated nothing

more. Respondents simply should not be held accountable for

truthful answers later deemed unsatisfactory because of omissions

caused by the imprecision of the question.

Thus, the doctrine of literal truth should mandate a dismissal

of the indictment, or, minimally, a new trial with proper jury

instructions,

C. Petitioner Could Not Reasonably Have Assumed that the

Inquiry by Customs was a “Proceeding” within the Meaning

of 18 U.S.C. §1505.

The issue of whether the Customs inquiry constituted a

“proceeding” before an agency within the meaning of 18 U.S.C.

§1505 was argued to the Tenth Circuit Court of Appeals on the

government’s appeal from the dismissal of the indictment in

United States v. Browning, 572 F.2d 720 (10th Cir.), cert.

denied 439 U.S. 822 (1978). But the issue raised there was in a

theoretical context based on the face of the indictment, no facts

having been presented.

The facts as actually developed below show not one formal

investigation, but rather a few intermittent questions by Customs

stretching over a period of four years. It is not at all unusual for

Customs to be in contact with importers and exporters and there-

15

fore defendant had no notice that Customs was conducting an

“investigation” in which he should not interfere.

The purpose of the first visit by Customs agents in 1970 was

to ascertain that the new method of importing unassembled parts

was being properly utilized. Over the course of the next four

years, Customs was in touch with Browning only sporadically,

and in no sense often or formal enough for him to have reason-

ably assumed he should maintain a hands-off posture between

himself and other people being questioned. Petitioner would have

no reason to see anything improper about discussing a Customs

matter, as he had countless times before, with his business

associates at FN.

The concept that every contact by Customs is a “proceeding”

dilutes the purpose of the obstruction statutes, which is to pro-

tect the integrity of the investigative process. If an individual is

not reasonably aware an investigation is in progress, then that

individual receives no fair warning that his involvement may be

deemed criminal interference.

The cases originally relied on by the Tenth Circuit*, to the

effect that an investigation is a “proceeding” within the meaning

of 18 U.S.C. §1505, are inapposite to the facts here, All that

has been demonstrated is that Petitioner helped answer a routine

inquiry of an agency regularly in contact with his business.

Such an inquiry, simply put, should not be deemed an investi-

gation.

* * *

The growing public concern with—and the laudatory law

enforcement emphasis on—“white collar crime,” will, we submit,

require the Courts to be more sensitive to the notion that the

decision to prosecute some activity criminally rather than civilly

*United States v. Fruchtman, 421 F.2d 1019 (6th Cir.), cert. denied,

400 U.S. 849 (1970); Rice v. United States, 356 F.2d 709 (8th Cir.

1966); United States v. Carzoli, 447 F.2d 774 (7th Cir. 1971), cert.

denied, 404 U.S. 1015 (1972); United States v. Vixie, 532 F.2d 1277

(9th Cir. 1976); United States vy. Batten, 226 F. Supp. 492 (D.D.C.

1964), cert. denied 380 U.S. 912 (1965).

16

rests almost exclusively with the judgment and discretion of the

prosecution. The determination to prosecute bank robbers, kid-

nappers, or drug offenders criminally rather than civilly requires

less sophisticated judgment than the determination of what

should constitute u civil or criminal tax or securities violation;

not all omissions on income tax returns or on filings with the

Securities and Exchange Commission should be or are prose-

cuted criminally.

During the last twenty years, this Court has primarily focused

on procedural safeguards applicable to the average criminal case;

far less attention has been paid to the discretion of the prosecutor

in substantively classifying some activity criminal rather than

civil. The Judiciary today must apply its collective wisdom 2nd

life-experience to weed out those cases in which prosecutorial

discretion was exercised mistakenly. We believe that the making

of a crime from stretched and technical formulations—here the

elevation of an agency inquiry into a formal “proceeding” and

an unneeded answer into a “material omission”—raises serious

questions of fair warning and notice. Simply put, the conse-

quences of proscribed conduct must be reasonably clear and

public before an individual should be branded a criminal.

We contend that, at bottom, the facts of this case—for each of

the reasons advanced separately and collectively—exemplify the

misuse of the “obstruction” concept to stretch relatively in-

nocuous conduct into criminality and we respectfully urge this

Court to grant the writ.

17

Conclusion

For the foregoing reasons, a writ of certiorari should issue to

review the judgment of the Court of Appeals for the Tenth

Circuit.

Respectfully submitted,

ELKAN ABRAMOWITZ

Counsel for Petitioner

OBERMAIER, MORVILLO & ABRAMOWITZ, P.C.

1290 Avenue of the Americas

New York, New York 10104

(212) 489-1500

ADAM E. RITHOLZ,:

Of Counsel

April 6, 1981

la

Opinion of the Court of Appeals

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-A ppellee,

Ve

JOHN VAL BROWNING,

Defendant-A ppellant.

No. 79-1893

Filed Nov. 14, 1980

HOWARD K. PHILLIPS

Clerk

Appeal from the United States District Court

For the District of Utah

(D.C. No. CR 76 46)

David M. Rosen, Special Assistant United States Attorney

(Ronald L. Rencher, United States Attorney, Salt Lake City,

Utah; and Frederick R. Buckles, Special Assistant United

States Attorney, St. Louis, Missouri, with him on the brief)

for Plaintiff-Appellee.

Elkan Abramowitz (Adam E. Ritholz and Obermaier,

Morvillo, Abramowitz & Fitzpatrick, New York, New York;

and Herschel J. Saperstein and Michael F. Heyrend of

of Watkiss & Campbell, Salt Lake City, Utah, with him on

the brief) for Defendant-Appellant.

MCWILLIAMS, BREITENSTEIN AND Doy Le, Circuit Judges,

2a

Opinion of the Court of Appeals

DoyLe, Circuit Judge.

The defendant above named, who was formerly President of

Browning Arms Company, here appeals a conviction on an in-

dictment which charged that Browning, with knowledge of an

ongoing investigation which was being conducted by the United

States Custom Service, endeavored to obstruct the due and proper

administration of the Customs duties laws as to material mat-

ters by advising and suggesting that an exporter of the Brown-

ing rifles give incomplete and misleading answers to questions

which had been propounded by the Customs Service, contrary

to 18 U.S.C. §1505'.

This prosecution grows out of the importation by Browning

Arms Company of great numbers of .22 caliber semi-automatic

rifles from a Parisian firearms concern named Fabrique Na-

tionale d’Arms de Guerre, which company will be referred to

as FN. FN manufactured these rifles in accordance with specifi-

cations and designs provided by Browning Arms Company. The

problem arose because of the fact that during the latter half of

the 1960’s, the Browning .22 caliber rifle could not be competi-

tive with domestically manufactured .22 caliber rifles if they

were priced in excess of $25.00, because of the fact that the duty

increases on imports that are valued between $25.00 and $50.00.

Accordingly, FN and Browning agreed to maintain the price

of the .22 semi-automatic rifles at $24.95. At the same time

Browning Arms Company agreed to make additional payments

to FN in excess of that stated in the invoice price. In the year

1965, the Customs Service changed its special Customs invoice

Form No. 5515 so as to require disclosure of all assists which

were not included in the invoice price. Notwithstanding the

amendment to Form No. 5515, tie Treasury Department, in

1Whoever corruptly, or by threats or force, or by any threatening letter

or communication influences, obstructs, or impedes or endeavors to in-

fluence, obstruct, or impede the due and proper administration of the law

under which such proceeding is being had before such department or

agency of the United States.

3a

Opinion of the Court of Appeals

April of 1965, published a Notice of Intention to Delay require-

ments Revising Customs Form 5515, stating that the question

on the form pertaining to assistance did not have to be answered.

(Fed. Reg., April 19, 1965, at 5862). That question was not

answered during the period 1965 through 1970, when there were

nearly 200 invoices accompanying the shipment of .22 semi-

automatic rifles from FN to Browning. Customs never requested

that Browning answer the question. It was not until 1970, when

Browning Arms Company transferred production of these rifles

from FN to Japan that FN began to raise the invoice price of

the rifles to reflect its true value. The invoice value is listed as

$51.00 in the year 1971. Browning Arms instituted a new

method of importing weapons in 1970, and the Customs Service

sent investigators to see that Browning Arms was properly re-

porting under the new system. This investigation continued until

1975. Initially, the investigation was conducted by Trost and

Regan. They discovered that various so-called “assists”, the side

payments paid to FN, amounted to as much as $18.40 for each

weapon. The so-called assists were defined by Customs as pay-

ment by importer to exporter for tooling, design, development

and other similar financial assistance. They did not include part

of the cost or value of the weapon.

Early in the investigation, Mr. Regan, requested that Brown-

ing answer the question on the invoice pertaining to assistance.

Browning responded that he was under the impression that the

question did not have to be answered. But Regan wrote a letter

to him saying that it was a part of the invoice.

After the transfer of production of the weapon to Japan and

after FN raised the invoice price to a level of over $50.00, the

investigators discovered that the company had not reported cer-

tain assists to the Customs Service from 1964 to 1970. There-

after, the Customs Service, through Trost and Regan, conducted

a full inquiry. They were unable to get sufficient information from

the Browning companies, and another agent, one Duncan, was

called into the case. Duncan concluded that it was necessary to

4a

Opinion of the Court of Appeals

investigate FN, and he communicated with one Rudman, a Cus-

toms Service representative, in Paris, France. Rudman met with

FN officials several times and obtained answers needed by the

investigators in St. Louis. He dealt with Heidebroek of FN. One

of the questions asked of Heidebroek was why the price of the

.22 caliber rifles had risen from $24.95 to over $50.00 in 1970,

Heidebroek asked for time to research the answer. He then sent

a letter to Mr, Browning, telling him of the visit by Mr. Rudman.

This was March 25, 1974, Heidebroek explained that the United

States Customs wished to know whether the invoice values con-

tained the costs of tooling. He also attached 33 questions which

had been asked by Rudman, One of the questions to FN sought

to have FN supply the dollar amount of the costs not reflected

on the iavoice for the .22 rifles. Heidebroek sent this letter to

the defendant, so that he could comment on the questions and

supply information. On June 4, 1974, Mr. Browning responded

to the questions asked him by suggesting answers to the questions

submitted in writing. One suggested answer said that, throughout

the course of dealings with FN, Browning had stated the weapon

had to cost below $25.00 or they could not place any orders,

since the duty charged where the value was over $25.00 effec-

tively killed sales of the rifles. The suggested answer went on

to say that some time after May of 1970 it was realized that it

would not long be possible to maintain the price at $25.00 by

absorption in general overhead, “We, therefore, had to bring

the price over the $25.00 level, even though we might lose this

job entirely.” The answer concluded that the price was accord-

ingly allowed to increase, first to $34.50, then to $42.00, and

finally, to $51.40.

As a result of the increase, the manufacture of this rifle was

transferred to Japan. The defendant answered question 20 by

telling FN to tell Customs that no documents existed. The an-

swer suggested by Browning was for FN to tell Customs that one

reason the price rose to $51.40 was because the side price was

phased out in 1970, Also, defendant requested that FN tell Cus-

toms that the price had been maintained at $24.95 by absorbing

Sa

Opinion of the Court of Appeals

the loss on this rifle under the general overhead of FN. The truth

was that there was a side price which was paying the so-called

loss, rather than the loss being absorbed in general overhead.

Thus, the defendant's answer sought to conceal from Customs

the existence of the side price, and to have Customs believe in-

stead that any costs to FN above $24.95 were being absorbed

in overhead. In his communications to Heidebroek, the defendant

acknowledged that even though the goal was to avoid side pay-

ments, that this should not be admitted because side payments

would amount to fraud.

The charge is predicated on an attempted corrupt obstructing

or impeding of due and proper administration of the law, and

the charge itself was tied to the giving of incomplete and mis-

leading answers to questions which had been asked by the Cus-

toms Service. Browning's appeal is based upon the following con-

tentions:

A. That there was insufficient evidence to sustain a convic-

tion.

B, That the Customs investigation could not be regarded as

“due and proper administration of the law within the

meaning of §1505”, supra.

C. That the trial court erred in failing to instruct the jury

that counseling literal and responsive answers to the ques-

tions presented constituted a defense of the charge, and,

D. That the government should be estopped from criminally

prosecuting Browning.

A-1. Was the Evidence Sufficient to Sustain Appellant's

Conviction for Obstructing Justice?

Was Appellant’s Conduct Unrelated to a Material Issue in

the Administrative Proceeding?

Appellant argues that the advice he gave to FN was not ma-

terial to the Customs search. Appellant claims that in order to

be convicted for obstruction of justice, the conduct constituting

6a

Opinion of the Court of Appeals

the alleged offense must have been material to the investigation.

United States v. Ryan, 455 F.2d 728 (9th Cir. 1972).

Unquestionably, the conduct of the accused must have been

material to the investigation, but we conclude that the conduct

of Browning was materially related to the investigation.

Browning argues that Customs was interested in discovering

the costs of the rifles and not the price; that the supplemental

payments were material to the price only, and not the cost. The

cost to manufacture these rifles remained stable regardless of

the price the company paid for the rifles. Therefore, Browning

further argues, any advice he gave pertaining to supplemental

payments was only relevant to a non-material issue of the inves-

tigation.

The object of the Customs investigation was to learn the

value of the rifles imported by Browning, whereby the duty could

be assessed. Mr. Hintz, Director of Classification and Value Divi-

sion for the St. Louis Customs District, stated that in assessing

the duty due on an imported item, the Customs Service deter-

mines the value and classification of the item. Mr. Trost, the

import specialist from Customs, testified that value was the im-

portant element in determining the duty owed on imports. So

also did Mr. William Rudman, Special Agent of the United

States Customs Service, testify to that effect. The correspondence

between Browning and FN personnel showed that the Browning

and FN people were aware Customs was seeking to discover the

value of the rifles, and that value had to do with price, as well as

cost. 19 U.S.C. §1401(a) defines the term “value” as it pertains

to imported merchandise and that section does not consider costs

alone, but also considers price.

We must, therefore, hold that both cost and profit were and

are material to the Customs investigation. Accordingly the in-

formation pertaining to the supplemental payments from Brown-

ing to FN become very material in determining the genuine

value of the rifles for Customs purposes.

7a

Opinion of the Court of Appeals

Browning maintains that inasmuch as FN had furnished the

actual cost of the rifles to Customs that Customs knew the dif-

ferential that existed between the invoice price and the actual

cost, and that it was not necessary that customs know the man-

ner of compensating for the differential. Browning, however, is

now talking about a document in which FN furnished the actual

cost to Customs, which is dated July 22, 1974, long after the

relevant period of the Customs inquiry. This document was fur-

nished to Customs after the dates when Browning was attempt-

ing to encourage FN to give misleading answers to the questions

submitted by Customs. Browning’s telex to FN suggesting an-

swers to the questions asked by Customs was sent June 4, 1974,

and the relevant telephone call from Browning which made other

suggestions as to answers to give to Customs was on June 5,

1974. So, at the time of Browning’s alleged effort to pursuade

FN to give false answers the Customs officials had not learned

about the actual cost profits or price of the rifles.

Unquestionably the Customs had a legitimate interest in as-

certaining the value of the rifles in order to determine how much

tax was due on them. The value includes not only the cost of

production of the rifles, it includes as well all relevant factors

making up the price. So, when there were communications hav-

ing to do with value, these were material to the investigation.

It cannot be said, therefore, that the applicant’s conduct was un-

related to a material issue in the administrative proceeding and

it cannot be said that his contention that the evidence was in-

sufficient to establish obstruction of justice was valid.

A-2. Is the Evidence Insufficient to Sustain a Conviction

Since Appellant Contends That he Merely Counseled the Omis-

sion of Unrequested Information Correct Whereby it Did Not

Result in a False Statement and Did Not Hinder the Proceeding.

Browning relies on the Supreme Court’s decision in Bronston

v. United States, 409 U.S. 352 (1973) to support and illustrate

his contention that he is not to be prosecuted for advising FN to

8a

Opinion of the Court of Appeals

give a literally true answer to the questions asked by Customs.

But Bronston differs from the case that we now consider. Bron-

ston involved a perjury prosecution in which the question was

whether the defendant had told the truth. The ultimate question

in the case at bar is not whether the defendant told the truth but

whether the defendant obstructed or interfered with the process

of truthfinding in an investigation in the process of enforcing the

law. In other words, was the defendant, Mr. Browning, seeking

to counsel FN to answer the questions in a manner which would

interfere with the process of truthfinding? Literal truth is not the

test here, and, in any event, Browning did not counsel FN to

tell the literal truth.

In the telex communicated by Browning to FN June 4, 1974

FN was advised to say in answering question 9 to the Customs

officials that the reason that the price increased from 1970 to

1971 over $25.00 a unit was because:

** * * “about May 1970 we realized that it would no

longer be possible to maintain the price of 25 dirs by ab-

sorption in general overhead. We therefore, had to bring

the price over the 25 dlr level even though we might lose

this business entirely. The price was accordingly allowed to

increase, first to 34.50 dirs, then to 42.00 dirs, and it fi-

nally became 51.40 dirs * * * *,”

The misstatement was the recitation within the quoted material

that the price had long been maintained at $25.00 by absorption

in general overhead. This was plainly false. Browning had paid

the cost, including the $25.00 invoice price, by giving supple-

mental payments to FN under the guise of reimbursement of

development expenses. It is obvious, therefore, that Browning

counseled FN to misstate the facts, to give an incorrect answer

to a specific question propounded by Customs.

The foregoing is supported by the phone call that Browning

made to Mr. van der Rest of FN which took place June 5, 1974

in which Browning told van der Rest that:

9a

Opinion of the Court of Appeals

“what is overall to be avoided is that they [Customs] would

be given the information that, with the .22 rifles side pay-

ments have been done. The Customs will very well know

the goal of what we have done but to say squarely that side

payments have been done is a matter of fraud.”

So again Browning did not advise FN to tell the literal truth

about the side payments. Browning counseled FN not to reveal

the facts about the side payments.

In view of the fact that Customs was not told the literal truth,

and that FN was counseled by Browning as to how to avoid

telling the truth, Browning is in a poor way to maintain that he

did not contribute to the obstruction of the enforcement of the

laws. ,

A-3. Did the Conduct of the Defendant Considered as a

Whole Constitute a Finding That the Defendant Acted Corruptly

as Required by the Statute?

The essence of the argument on Browning’s behalf is that

an additional element enters into a determination of whether

his conduct was corrupt. Counsel states that there is no proof

of sinister behavior and hence the evidence fails to establish this

essential requirement. We disagree.

It is said that the defendant in his conversations with FN was

not seeking profit for himself; that he was acting on behalf of

his company; that the payments were by check from one cor-

poration to another; that the defendant was under no mandate

from Customs not to talk to FN and that as a result defendant

did not act corruptly. The argument becomes less valid when

counsel states that Browning “neither lied nor counseled a lie.”

But Browning did counsel the FN officer to answer the questions

submitted in a manner which would mislead the government in

its quest for information with which to determine the value of

the imported rifles. The government’s case is based on all of the

10a

Opinion of the Court of Appeals

basic facts and the reasonable inferences which flow from those

facts and these speak loudly to the proposition that the attempt

was made to misrepresent the value of these rifles and thereby

pay a greatly reduced custom duty.

Counsel next pleads that he was never warned that this con-

duct was in violation of law. Any reasonable man would realize

that conduct which sought to mislead and did mislead the gov-

ernment as to the amount to be paid for import duty was un-

lawful, and, therefore, it was not necessary for Browning to be

aware of the exact details of the statute.

Finally we are told by counsel that there was nothing evil or

sinful in Browning’s conduct, that the only evil existed, perhaps,

in Browning’s thoughts. Wrong. The fact that Browning did not

tell the FN listener that he wanted him to defraud the govern-

ment is immaterial. The sum total of the background and the

advice is sufficient to show that such was Browning’s intent.

In recent months we have considered this issue. The case was

United States v. Ogle, 613 F.2d 233 (10th Cir., 1979). We

there said that the term “corruptly” as used in obstruction of

justice statutes “is directed to the effort to bring about a partic-

ular result such as affecting the verdict of a jury on the testimony

of a witness. . . . This is per se obstruction of justice. . . .” Id.

at 239. We further said that if the jury in the subject case in

which the defendant was seeking to influence the verdict of the

jury believed that the defendant had done the acts complained

of that this would be sufficient evidence to sustain the defen-

dant’s conviction. Although the efforts of Browning were some-

what more subtle than the acts of Ogle, there is no difference in

terms of legal effect.

In United States v. Browning, 572 F.2d 720 (10th Cir. 1978),

cert. denied, 434 U.S. 822, we were called upon to construe the

statutes under which this indictment was reached, i.e. 18 U.S.C.

§1505. A motion to dismiss the indictment had been granted and

lla

Opinion of the Court of Appeals

it was contended that advising another to give false statements

did not constitute a corrupt act. Because of this argument in

support of a motion to dismiss and in the absence of evidence,

we considered and discussed the meaning of corruption under

the statute.

The district court had ruled in dismissing the indictment that

only “evil means” such as coercion and intimidation of witnesses

constitute a violation. We added:

“The authorities are to the contrary. They hold that advis-

ing or procuring false testimony or statements comes within

the prohibition of the obstruction of justice statutes. See

United States v. Abrams, 427 F.2d 86 (3d Cir.), cert.

denied, 400 U.S. 832, 91 S.Ct. 64, 21 L.Ed.2d 63 (1970),

($1505); Cole v. United States, 329 F.2d 437 (9th Cir.

1964), cert. denied, 377 U.S. 954, 84 S.Ct. 1630, 12 L.Ed.

2d 497 (1964) ($1503); Stein v. United States, 337 F.2d

14 (9th Cir. 1964). In United States v. Henderson, 386 F.

Supp. 1048 (S.D.N.Y. 1974), the court said: ‘Under sec-

tions 1503 and 1505 the word “corruptly” has been given

a broad and all-inclusive meaning; both sections have been

held to encompass obstruction in the absence of force or

threats... . 386 F. Supp. at 1055.’

572 F.2d at 724-725.

The jury would, of course, in order to find that Browning

acted corruptly, have to find that under the evidence presented

Browning advised FN to give false statements or acted in a

manner to produce a result which would obstruct the investiga-

tion. Such a finding by the jury would fulfill the requirement

that Browning’s conduct was corrupt. In effect the jury did so

find and the evidence was sufficient to allow it to so find. There-

fore, counsel’s argument, although ingenious, is insufficient.

12a

Opinion of the Court of Appeals

B. Did the Inquiry by Customs Constitute “Due and Proper

Administration of the Law” Within the Meaning of the Statute?

Counsel for Browning here argues that William Rudman, the

Customs official assigned to question FN, was without official

authority to conduct an investigation of a foreign company, and

thus, since there was no authority for Rudman to conduct an

investigation of FN and since, therefore, Rudman’s efforts did

not constitute an “official inquiry”, Browning’s endeavor to influ-

ence the results of the questions could not constitute an attempt

to obstruct “the due and proper administration of the laws.”

The contention is based on a faulty premise, namely that the in-

vestigation was of FN. The United States Customs was engaged

in an investigation of Browning Arms Co., a United States con-

cern; FN was not the culprit. Rudman was asked to talk to the

officials of FN regarding the ongoing investigation of Brown-

ing Arms Co.

Viewed in this light the questioning of FN in furtherance of

the Browning investigation constituted the due and proper ad-

ministration of the laws regulating Customs investigations of

United States companies. Rudman was performing duties re-

quired of him as an investigator for the United States Customs

Service. The questioning of the FN officials was a valid part of

the administrative investigation and it follows that the claim must

be denied.

C. Did the Evidence Justify the Submission of an Instruction

to the Jury That the Counseling of Literally True and Respond-

sive Answers to the Questions Presented was a Defense to

Count I of the Indictment Against Browning?

The requested instruction would be justified only if there ex-

isted at least a fighting question as to whether Browning had

instructed literally true and responsive answers. Or, stated dif-

ferently, did Browning merely select a different way of an-

swering the question and did this alternative answer constitute a

13a

Opinion of the Court of Appeals

true response? Under the circumstances presented this instruc-

tion would be misleading and confusing. We must hold that the

action of the trial court in refusing the proposed instruction was

correct.

D. Should the Government be Estopped from Criminally

Prosecuting the Appellant as a Result of Their Having Allegedly

Misled Him.

The general thrust of Browning’s argument here is that he was

misled by investigator Regan to believe that he had acted ille-

gally over the years in not answering the question regarding as-

sists on the Customs invoices, and that the alleged obstruction

of justice occurred because of that misinformation, since Brown-

ing argues that if Regan were correct and Browning should have

been disclosing the assists, Browning Arms would have faced

financial ruin. As a consequence Browning decided to not divulge

the information regarding supplementary payments to FN.

Quite apart from the proposition that Browning was not shown

to have been misled or to have acted on the basis of having been

misled, (Browning acted out of expediency; he sought to avoid

high import duties by misrepresenting the value) the law of es-

toppel in relationship to the government is not available to

Browning. The courts invoke the doctrine of estoppel against

the government with great reluctance. The only circumstances

justifying use of the doctrine are those which add up to the con-

clusion that it does not interfere with underlying government

policies or unduly undermine the correct enforcement of a par-

ticular law or regulation. See generally Annot., 27 ALR Fed.

702 (1976).

It is fundamental that the United States is not estopped by

representations made by an agent without authority to bind the

government in a transaction. Jackson v. United States, 573 F.2d

1189 (Ct. Cl. 1978); Albrechsten v. Andrus, 570 F.2d 906

(10th Cir.), cert. denied, 439 U.S. 818 (1978); Enfield v.

14a

Opinion of the Court of Appeals

Kleppe, 566 F.2d 1139, (10th Cir. 1977); Atlantic Richfield

Co. v. Hickel, 432 F.2d 587, 591-592 (10th Cir. 1970); Mas-

saglia v. Commissioner of Internal Revenue, 286 F.2d 258, 262

(10th Cir. 1961).

It has been held that one who relies on a legal interpretation

by a governmental official assumes the risk that it is in error.

Airmotive Engineering Corp. v. United States, 535 F.2d 8, 11,

n.3 (Ct. Cl. 1976). It has also been held or said that “the gov-

ernment could scarcely function if it were bound by its em-

ployees’ unauthorized representations.’” Goldberg v. Wein-

berger, 546 F.2d 477, 480 (2nd Cir. 1976), cert. denied, 431

U.S. 937 (1977).

We regard this entire effort as an expedient position which

was not the real cause of his activity. The real cause of keeping

the supplemental payments secret was the need to keep the price

of the rifles down and therefore, the need to reduce the amount

of duty. United States v. Pennsylvania Industrial Chemical Cor-

poration, 411 U.S. 655 (1973) is not germane. That case stands

for the proposition that if a defendant relies in good faith on a

government regulation the government may be prevented from

criminally prosecuting that defendant for acting pursuant to it.

In Pennsylvania the defendant had been charged with violating

a statute and the defendant maintained that a government reg-

ulation permitted him to do what he had done. The court, how-

ever, held that the defense should be allowed to show that he

relied in good faith on a government regulation. If the defendant

were able to establish good faith reliance the court said that the

government should then be prevented from prosecuting him.

The government’s position is that the Pennsylvania decision

is wholly different on its facts from the case at bar. In the case

presented the defendant did not make a false statement upon an

invoice or entry, and thereby violate a statute which a regula-

tion was in conflict with. In Pennsylvania, the defendant claimed

that he acted as a result of confusion as to whether he had in

law violated a statute which a regulation seemed to be in con-

15a

Opinion of the Court of Appeals

flict with, and which regulation allowed him to follow the course

which he took. In the case at bar, the government points out

that there is no governmentally caused confusion. The defendant

is unable to establish that he had a good faith belief which al-

lowed him to misstate and attempt to persuade FN to misstate

the value of the imported rifles. The effect, therefore, of the gov-

ernment’s argument is that any confusion that Browning may

have had did not and could not have served to justify continu-

ing the deceitful practices in question since the conduct of Brown-

ing was foreign to any misconception which he contends existed.

Browning admitted that his sole purpose in making the sup-

plemental payments to FN was so as to keep the price of the

.22 semi-automatic rifle imported from Belgium competitive with

the price of similar rifles manufactured in this country. Had he

disclosed the fact of the supplemental payments to Customs the

duty on the .22s would have risen substantially, and it would

not have been possible for Browning to sell the .22s in a com-

petitive market. These uncontested facts lead to the conclusion

that the reason Browning paid the amount of the price above

$24.95 as supplemental payments to FN rather than disclosing

that amount as part of the invoice price was that Browning had

not intended to tell Customs of that additional figure.

The United States Supreme Court has spoken on this. It stated

in Federal Crop Insurance Corporation v. Merrill, 332 U.S. 380,

68 S.Ct. 1, 92 L.Ed. 10 (1947), that, as a general rule, the gov-

ernment would not be bound by the incorrect and misleading

statements of its agents. It refused to apply the private law prin-

ciples of estoppel against the government because it obviously

considered that the government’s policies, which have general

social significance, should not be at the mercy of an errant gov-

ernment official. In Merrill, as in the instant case, a government

official had given the plaintiff information which was in contra-

diction to the applicable government regulation. The court re-

fused to hold the government bound (or estopped) by the er-

roneous information given by the government’s representative.

16a

Opinion of the Court of Appeals

In the case at bar, at least one government agent, Regan, did

misinform Browning regarding the requirements to be complied

with when filling out the Custom forms. The statements made

by Regan were incorrect. Under the settled law, however, incor-

rect statements made by a government official may not serve as

a basis for holding the government estopped from enforcing its

regulations even if the misinformation had led to Browning’s

subsequent conduct.

Even if this were not the law, it was not shown that Browning

relied on Regan’s statements. Additionally even if Regan’s state-

ments could be used as a basis for holding the government es-

topped, and even if Browning had relied on Regan’s statements,

Browning is in a poor position to use the doctrine. Principles of

estoppel may not be used to justify a persons deliberate viola-

tion of one statute in order to escape liability under another

statute.

We conclude that the trial court did not err in either the par-

ticulars relied on or otherwise.

We affirm

—_—

17a

Judgment of the Court of Appeals

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

SEPTEMBER TERM — November 14, 1980

Before Honorable Robert H. McWilliams, Honorable Jean S.

Breitenstein, and Honorable William E. Doyle, Circuit Judges.

UNITED STATES OF AMERICA,

Plaintiff- Appellee,

. *

JOHN VAL BROWNING,

Defendant-A ppellant.

JUDGMENT

No. 79-1893

(D.C. No. 76-46)

This cause came on to be heard on the record on appeal from

the United States District Court for the District of Utah and

was argued by counsel.

Upon consideration whereof, it is ordered that the judgment

of that court is affirmed. It is the further order of this court that

John Val Browning, appellant, shall, within ten (10) days

from and after the date of the filing of the mandate of this

court in the district court, surrender himself to the custody of

the United States Marshal for the District of Utah in execution

of the judgment and sentence imposed upon him.

The District Court may, in its discretion, permit the appellant

to surrender directly to the designated Bureau of Prisons insti-

tution for service of sentence.

HOWARD K. PHILLIPs, Clerk

19a

Order Denying Petition for Rehearing

JANUARY TERM — February 5, 1981

Before Honorable Oliver Seth, Chief Judge, Honorable Jean S.

Breitenstein, Honorable William J. Holloway, Jr., Honorable

Robert H. McWilliams, Honorable James E. Barrett, Honorable

William E. Doyle, Honorable Monroe G. McKay, Honorable

James K. Logan and Honorable Stephanie K. Seymour, Circuit

Judges

UNITED STATES OF AMERICA,

Plaintiff-A ppellee,

Vv.

JOHN VAL BROWNING,

Defendant-A ppellant.

No. 79-1893

This matter comes on for consideration of appellant’s petition

for rehearing and suggestion for rehearing en banc.

Upon consideration whereof, the petition for rehearing is

denied by the panel that rendered the decision sought to be re-

heard.

The suggestion for rehearing en banc having been transmitted

to the members of the panel and the judges of the court who are

in regular active service and no judge in regular active service

or a judge who was a member of the panel that rendered the

opinion sought to be reheard having requested a vote on such

a suggestion made by a party, Rule 35(b) Federal Rules of Ap-

pellate Procedure, the suggestion for rehearing is denied.

HowarbD K. Pui.Luips, Clerk

PREVIOUS PAGE WAS BLANK

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