Petition for Writ of Certiorari — Cannon v. United States

f- Supreme Court, u.s,

\ FILED

Number 942120 JUN 26 1995

IN THE SUPREME COURT OF THE UNTTED’S FATES

OCTOBER TERM, 1995

JODY C. CANNON,

Petitioner,

vs.

UNITED STATES OF

AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

MITCHEL P. HOUSE, JR.

Georgia Bar No. 369100

Attorney for Petitioner

OF COUNSEL:

SELL & MELTON

1400 Charter Medical Building

P. O. Box 229

Macon, Georgia 31297-2899

(912) 746-8521

Number

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1995

JODY C. CANNON,

Petitioner,

vs.

UNITED STATES OF

AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

MITCHEL P. HOUSE, JR.

Georgia Bar No. 369100

Attorney for Petitioner

OF COUNSEL:

SELL & MELTON

1400 Charter Medical Building

P. O. Box 229

Macon, Georgia 31297-2899

(912) 746-8521

QUESTIONS PRESENTED

1. Whether Petitioner’s conspiracy conviction can stand when

he was acquitted of all substantive counts, and no overt

acts alleged in the indictment were proven at trial beyond

a reasonable doubt?

rs Whether Petitioner’s sentence may be enhanced 7 levels

for the alleged dollar loss to the government pursuant to

U.S.S.G. §2F1.1(b)(1)(H), without providing Petitioner

with credit for the value of the goods furnished under the

contract?

a Whether Petitioner must be resentenced given the fact

that one of two convictions was overturned as a matter of

law, and the District Court considered the conduct

underlying this conviction in fashioning Petitioner’s

sentence?

99.10670001.P99 i

TABLE OF CONTENTS

Page

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CONSTITUTIONAL AND STATUTORY

Pee Be SPE WEE WEED cc ccc ccc cence seuss 2

ee ge Ce bin be Wb we 4

REASONS FOR GRANTING THE WRIT ........... 8

I. THE ELEVENTH CIRCUIT'S

AFFIRMANCE OF CANNON’S

CONSPIRACY CONVICTION

CONFLICTS WITH 18 U.S.C. §371. ...... 9

II. THE QUESTION OF THE

‘ APPLICABILITY OF A SET-OFF FOR

VALUE PROVIDED AS

CONTEMPLATED BY APPLICATION

NOTE 7(a) OF U.S.S.G. §2F1.1(b)(1)(H)

HAS NOT BEEN ADDRESSED BY

FEDERAL COURTS. THIS

IMPORTANT ISSUE SHOULD BE

RESOLVED BY THE SUPREME

CE are Oe Se Bee i CES < 0 15

99.10670001.P99 ii

secant

TABLE OF CONTENTS

Page

lil. IN ANY EVENT, THE CASE MUST BE

REMANDED FOR RESENTENCING. ... 18

COIINCEARIIOEY. 6 fee ee ck ssi veniviessi ieee ee

99.10670001.P99 iii

TABLE OF AUTHORITIES

CASES

Arthur Pew Construction Co. v. Lipscomb, 965 F.2d 1559,

Re 2 ok bw A.) Oe ie eer one re 14

Ingram v. United States, 360 U.S. 672, 3 L.Ed.2d 1503

CE dns Ce aud EE CE k bee e KE RE See wcs 9, 14

United States v. Benz, 740 F.2d 903 (11th Cir. 1984)....... 9

United States v. Camejo, 929 F.2d 610 (11th Cir. 1991) .... 14

United States v. Cannon, 41 F.3d 1462, 1468 |

RUNES oe ye Ge 1, 6, 8, 10, 11, 16-18

United States v. Catchings, 922 F.2d 777 (11th Cir. 1991) ... 14

United States v. Drougas, 748 F.2d 8, 15 (1st Cir. 1984) .... 14

United States v. Falcone, 311 U.S. 205, 85 L.Ed 128

| Oe arora a ie ees @ oer wa 15

United States v. Frink, 912 F.2d 1413, 1415 (11th Cir.

Ss hers Fas nk rs oi ce een cn 14

ee 9

NN i 14, 15

United States v. Schneider, 930 F.2d 555 (7th Cir. 1991) .... 17

99.10670001.P99 iv

United States v. Sorrow, 732 F.2d 176, 179 (11th Cir.

NEE 5 0 CV h6 EnSR CERES 6 O40N SROs eran 11

Williams v. United States, 503 U.S. 193, 112 S.Ct. 1112

2.74 re o0 hws og sa't-by Gb mabe obits aman 19

STATUTES

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OS TED. SESE) occ cccnee vd se spanaie comme wee 23

OTHER |

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USSG. GEFLUOM ERT) occ cc ecccevccceves i, 8, 15-18

99.10670001.P99 Vv

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1995

JODY C. CANNON,

Petitioner,

vs.

UNITED STATES OF

AMERICA,

Respondent.

OR IT OF C O

Jody C. Cannon petitions for a writ of certiorari to review

the judgment of the United States Court of Appeals for the

Eleventh Circuit in this case.

OPINIONS BELOW

The opinion of the Court of Appeals is reported as United

. States v. Cannon, 41 F.3d 1462 (11th Cir. 1995), and appears in

Appendix A to this Petition. The Order on Petition for

Rehearing and Suggestion of Rehearing En Banc appears in

Appendix B to this Petition. The Judgment rendered by the

District Court for the Middle District of Georgia, Macon Division,

appears in Appendix C.

ICTION

The Eleventh Circuit Court of Appeals’ opinion was issued

on January 6, 1995. On March 29, 1995, the Eleventh Circuit

99.10670001.P99 1

issued its order denying Petitioner’s Petition for Rehearing and

Suggestion of Rehearing En Banc. The jurisdiction of this Court

is invoked pursuant to 28 U.S.C. $1254(1).

CONSTITUTIONAL AND

STATUTORY PROVISIONS INVOLVED

18 U.S.C. §371

If two or more persons conspire either to

commit any offense against the United States, or to

defraud the United States, or any agency thereof in

any manner or for any purpose, and one or more

of such persons do any act to effect the object of

the conspiracy, each shall be fined under this title

or imprisoned not more than five years, or both.

If, however, the offense, the commission of

which is the object of the conspiracy, is a

misdemeanor only, the punishment for such

conspiracy shall not exceed the maximum

punishment provided for each misdemeanor.

18 U.S.C. §1001

Whoever, in any matter within the

jurisdiction of any department or agency of the

United States knowingly and willfully falsifies,

conceals or covers up by any trick, scheme, or

device a material fact, or makes any false, fictitious

or fraudulent statements or representations, or

makes or uses any false writing or document

knowing the same to contain any false, fictitious or

fraudulent statement or entry, shall be fined under

this title or imprisoned not more than five years, or

both.

99.10670001.P99 2

18 U.S.C. $3231

The district courts of the United States shall

have original jurisdiction, exclusive of the courts of

the States, of all offenses against the laws of the

United States.

Nothing in this title shall be held to take

away or impair the jurisdiction of the courts of the

several States under the laws thereof.

28 U.S.C. §1254(1)

Cases in the courts of appeals may be

reviewed by the Supreme Court by the following

methods:

(1) by writ of certiorari granted upon the

petition of any party to any civil or criminal case,

before or after rendition of judgment of decree.

99.10670001.P99 3

STATEMENT OF CASE!

Petitioner Jody C. Cannon, hereinafter "Cannon," was the

sole defendant in a five count indictment. The superseding

indictment, dated July 17, 1992, alleged one count of conspiracy

and four substantive counts, charging that Cannon had knowingly

and willfully made false statements and representations to the

Department of Defense in violation of 18 U.S.C. §1001. (R1-11-

1). Count I of the superseding indictment alleged that Cannon,

aided and abetted by others, conspired to defraud the United

States and to make and cause to be made false writings and

documents in the performance of contracts for the manufacture

of items for the United States Air Force, knowing that the

documents and writings were false. (R1-11, 1-2). Count I alleged

the following overt acts: |

A. Between September 30, 1986, and continuing up to

and including June 30, 1990, the Defendant, Jody

Cannon, an employee of Space Age Manufacturing,

Warner Robins, Georgia, aided and abetted by

others, while producing and manufacturing

\ Outboard Link Condition Control Transfers, also

called Engine Condition Levers, for the United

States, C-130 Transport Plane, pursuant to

contracts with the United States of America, did

cause to be produced and manufactured a quantity

of Outboard Link Condition Control Transfers tha*

did not meet the contract specifications and

requirements, in that the said Outboard Link

Condition Control Transfers were not constructed

‘Jurisdiction in the United States District Court for the

Middle District of Georgia was invoked pursuant to 18 U.S.C.

§3231.

99.10670001.P99 4

99.10670001.P99

in accordance with Military Standard 27643 as

specified in the contracts.

Between September 30, 1986, and continuing up to

and including June 30, 1990, the Defendant, Jody

Cannon, aided and abetted by others, presented

and caused to be presented to government

inspectors DD Form 250s, which were necessary for

Space Age Manufacturing to receive payment for

performance of the contracts and which caused the

United States Air Force to pay Space Age

Manufacturing for such performance, knowing that

he and others had not complied with the

specifications of the contracts with the United

States of America as represented.

- Between February 1, 1989, and continuing up to

and including June 30, 1990, the Defendant, Jody

Cannon, aided and abetted by others, while

producing and manufacturing armor plating for

United States helicopters pursuant to contracts with

the United States of America, did cause titanium

that did not meet the contract specifications and

requirements to be used in place of that titanium

specified in the contracts.

Between February 1, 1989, and continuing up to

and including June 30, 1990, the Defendant, Jody

Cannon, aided and abetted by others, presented

and caused to be presented to the government

inspectors DD Form 250s, which were necessary for

Space Age Manufacturing to receive payment for

performance of the above contracts, and which

caused the United States Air Force to pay Space

Age Manufacturing for such performance, knowing

that he and others had not complied with the

5

specifications of the contracts with the United

States of America as further specified in Counts 2,

3, 4 and 5.

(R1-11-1). Count V alleged that Petitioner, aided and abetted by

others, had made and caused to be made false writings and

documents by using and causing to be used a form DD 250 which

certified that contract specifications for Contract No. F09603-89-

G-0051-0063 had been fully performed, when in truth such

contract specifications had not been performed as required by the

contract. (R1-11, 6-7).

The DD Form 250 is a document which is presented to a

government inspector known as a "quality assurance

representative" (QAR). It is the duty of the QAR to come to the

manufacturing site, to perform tests and measurements, and to

review documentation before accepting a product on behalf of the

government. Nowhere on the DD Form 250 is there a

certification or a space for such certification by the contractor

that the contract specifications have been fully performed.

(Cannon, 41 F.3d at 1468). This document, which is completed

by the government QAR, merely contains a certification by the

QAR that he has inspected the items before accepting them.

(R1-48 - Exhibit "A"). The government did not produce any DD

Form 250s filled out by Cannon at trial, nor was it Cannon’s duty

to fill out or prepare these documents.

At Space Age, Cannon worked in the office as general

manager; his duties included bidding for contracts and purchasing

supplies for the performance of these contracts. The production

of parts as well as the inspection of parts was a separate

component of the business at Space Age in which Cannon did not

participate. (R3-17, 14-22).

The Government. contended with regard to all four

substantive counts, all of which concerned titanium armor plate,

99.10670001.P99 6

that Cannon, by way of a “false” DD Form 250, had certified that

the armor plate delivered was manufactured with MIL-T-46077

ballistically tested titanium when instead, it was manufactured

with non-ballistically tested, "generic" 9046 or 6ALAV titanium.

Testimony submitted by way of proffer (R6-60-67) from

Government employee Tom Yentzer, showed that the

Government considered the non-ballistically tested titanium and

ballistically tested titanium to be equivalent, and that the

Government allowed substitution of the non-ballistically tested

titanium for use as armor plate on helicopters. (R6-59, 63-67). In

addition, Cannon submitted a proffer of testimony from John W.

Bush, a Government Materials Metallurgical Engineer. (R6-67-

72). This testimony would have shown that the same type of non-

ballistically tested titanium supplied by Space Age was essentially

the equivalent of ballistically tested titanium, that it was

acceptable as a substitute material for the "intended use," and

that this titanium was indeed allowed to be substituted. (R6-67-

72). Cannon also proffered the testimony of Ronald Boulet,

Branch Chief in the Armament Directorate of Wright Laboratory

at Elgin Air Force Base, who would have testified: that an actual

piece of the titanium at issue in Count V that was seized from

Space Age and bore the job number of the contract at issue (R6-

48-50 testimony of FBI Agent Fred Stofer) was subjected to

ballistic testing and passed. (R6-28-42). Boulet would have

testified that this titanium was the equivalent of ballistically tested

titanium. (R6-28-42).

On August 18, 1992, Cannon was convicted of Count I, the

conspiracy count, and substantive Count V, but acquitted of

substantive Counts II, III and IV of the indictment. Cannon’s

Motion for a New Trial and Judgment of Acquittal were denied

on January 29, 1993.

Cannon was sentenced on March 24, 1993. Among other

rulings, the sentencing court enhanced Cannon’s sentence by 7

99.10670001.P99 7

levels pursuant to U.S.S.G. §2F1.1(b)(1)(H) for a dollar loss to

the government of $125,257.00. In calculating the amount of loss,

the court simply added together the value of the 1986 link

assembly contract mentioned in Count I - the conspiracy count -

and the titanium armor plate contract charged in Count V. (R9-

6). Cannon was sentenced to 30 months incarceration on each i

count of conviction, to run concurrently.

On appeal to the Eleventh Circuit Court of Appeals, the

court held that the evidence was insufficient as a matter of law to

convict Cannon of substantive Count V. United States v. Cannon,

41 F.3d 1462, 1468 (11th Cir. 1995). The court reasoned that the

Government had failed to prove that the DD 250 forms were

false. Jd. The court noted that the DD 250 forms do not certify

that the parts supplied conformed to the contract. Jd. Rather,

the QAR signs the form signifying acceptance and conformance

of the goods. /d. At trial, the QAR testified that he would not

have signed the DD 250 unless he had been presented with a

document certifying that the titanium had been ballistically tested.

Id. at 1468-69. However, the only certification form contained in

the file for the contract charged in Count V was for non-

ballistically tested titanium. /d. at 1469. The Eleventh Circuit

concluded that the DD 250 contained no representations from

Cannon or his employer concerning compliance with government

specifications. Jd, at 1468. Furthermore, there was no evidence

that false representations had been made to the QAR before the

QAR signed the DD 250 form. Jd. The Eleventh Circuit

reversed Petitioner’s conviction on substantive Count V.

However, Cannon’s conspiracy conviction and his sentence were

permitted to stand. /d. at 1469.

ee aS ee ee ee

Petitioner’s Petition for Rehearing and Suggestion of

Rehearing En Banc were denied by an Order dated March 29,

1995.

99,10670001.P99 8

REASONS FOR GRANTING THE WRIT

I.

THE ELEVENTH CIRCUIT’S AFFIRMANCE

OF CANNON’S CONSPIRACY

CONVI CON S.C. §371.

This case presents a unique situation. Cannon was

acquitted of every substantive count of the indictment, yet was

convicted of conspiracy. Because of the conspiracy conviction, he

received the same sentence as he would have received had his

conviction on the substantive count which was reversed been

permitted to stand.

Pursuant to 18 U.S.C. §371, the Government must prove

the following critical elements of a prima facie case of conspiracy:

1. Two or more persons conspired together;

2. There was an agreement to commit the offense

(Ingram v. United States, 360 U.S. 672, 3 L.Ed.2d 1503 (1959));

and

3. Accomplishment of one or more overt acts to effect

- the object of the conspiracy. See generally, United States v.

Garcia-Pena, 743 F.2d 1462 (11th Cir. 1984); United States v.

Benz, 740 F.2d 903 (11th Cir. 1984). As shown below, the

Government failed to introduce adequate proof of an overt act to

effect an object of the conspiracy pursuant to 18 U.S.C. §1001.

Furthermore, the Government failed to provide sufficient

evidence concerning an agreement to commit an offense.

The Eleventh Circuit upheld Cannon’s conspiracy

conviction, reasoning as follows:

99.10670001.P99 9

The Government identified Cannon’s

unindicted co-conspirators as Space Age

Manufacturing, Inc., and Space Age’s President,

Jack C. Kerstetter. Cannon placed bids, signed the

contracts at issue, and knowingly purchased non-

conforming titanium. Cannon and Kerstetter

discussed that ordering conforming titanium would

cause Space Age to lose money. While Cannon

argued that he purchased the titanium because

Kerstetter "ordered" him to do it, this does not

absolve his actions. Cannon, Space Age and

Kerstetter gave the USAF titanium with less

pecuniary value than the titanium it contracted for,

and with less performance value than the titanium

it contracted for.

Cannon, 41 F.3d at 1468.

The Eleventh Circuit reversed Cannon’s conviction on

Count V, in which the Government charged that Cannon had

violated 18 U.S.C. $1001 because he had “used and caused to be

used" a false Form DD 250. The court held that as a matter of

law, the Government failed to prove that the DD 250 forms were

false. Moreover, the court noted that, "Nowhere on the DD 250

does Cannon or anyone at Space Age certify that the parts

supplied conformed to the contract. Rather, the Government

QAR signs the form signifying acceptance and conformance of

the goods." Jd. at 1468. The court further noted that the only

evidence presented by the Government to show that the QAR

had signed the DD 250 forms because of false representations

was the QAR’s testimony that he would not have signed the DD

250 unless he had been presented with a document certifying the

titanium as ballistically tested. Jd. at 1468-69. However, when the

Government seized the file for the contract charged in Count V,

the only certification form it contained showed no signs of

99.10670001.P99 10

tampering and was for non-ballistically tested titanium. (R3-61-62,

Id. at 1469). The court concluded:

Although the titanium did not conform, the

documents did not lie. It was through the failure of

the QAR to perform an adequate review that the

non-conforming material was certified.

Id.

As evidenced by the Eleventh Circuit’s reversal of

substantive Count V, the Government did not prove the existence

of any false statements.

The only overt act mentioned in the Eleventh Circuit’s

opinion, act C, dealt with the contract that was the subject of |

Count V. However, the panel reversed Cannon’s conviction on

Count V because there were no false statements made to the

Government. In order for a conspiracy conviction under 18

U.S.C. §371 to stand, the Government must prove each element

of its case beyond a reasonable doubt. One element is the

accomplishment of one or more overt acts to effect the object of

the conspiracy. See United States v. Sorrow, 732 F.2d 176, 179

(11th Cir. 1984). The only overt act mentioned by the Eleventh

Circuit’s opinion was Cannon’s purchase of non-conforming

titanium. However, as the court later held in its reversal of

substantive Count V, neither Cannon nor the unindicted co-

conspirators ever represented to the Government that the

titanium was anything other than what it was.

Overt act C charged that Petitioner "did cause titanium

that did not meet the contract specifications and requirements to

be used in place of that titanium specified in the contracts." The

conduct charged in Overt act C is not necessarily criminal

conduct. In order for the jury to conclude that Cannon had

conspired to defraud the government and had committed Overt

99.10670001.P99 ll

Act C in furtherance of the conspiracy, the jury would have to

conclude that Cannon intended to provide the government

titanium with less value than that for which the government had

contracted. The district court excluded the proffered testimony

of Tom Yencer, which would have demonstrated that the

government considered non-baliistically tested titanium and

ballistically tested titanium to be equivalent, and that the

government allowed substitution of non-ballistically tested

titanium for use as armor plate on helicopters. (R6-59, 63-67).

The court also excluded the testimony of John W. Bush, a

government materials metallurgical engineer, which would have

shown that the same type of non-ballistically tested titanium

supplied by Space Age was essentially the equivalent of

ballistically tested titanium, that it was acceptable as a substitute

material for the "inténded use," and that this titanium was indeed

allowed to be substituted. (R6-67-72). The court also excluded

the testimony of Ronald Boulet, Branch Chief in the Armament

Directorate of Wright Laboratory at Elgin Air Force Base, who

would have testified that an actual piece of the titanium at issue

in Count V, that had been seized from Space Age and that bore

the job number of the contract at issue (R6-48-50, testimony of

FBI agent Fred Stofer) was subjected to ballistic testing and

passed. (R6-28-42). Boulet would have testified that this |

titanium was the equivalent of ballistically tested titanium. (R6-

28-42).

Had the jury been permitted to consider testimony that the

titanium supplied was equivalent to the titanium specified in the

contract, the jury could have concluded that Petitioner did not

intend to provide the government with titanium that was less |

valuable than that for which it had contracted. This testimony

was especially important given the fact that, as the Eleventh

Circuit concluded, there were no false statements made. Because

Cannon did not have the opportunity to prove that he did not

have the intent to defraud the government when he ordered the

— _ eevee eae

99.10670001.P99 12

titanium at issue in Overt act C, Overt act C may not provide the

basis for affirmance of Petitioner’s conspiracy conviction.

Furthermore, the evidence at trial showed that after

Cannon had ordered the non-conforming titanium, he quit his job.

He had no role in the manufacture of the armor plates that were

the subject of Count V, nor did he have any role in the

certification process. Although Cannon did order non-conforming

titanium, he did not "cause titanium that did not meet the

contract specifications and requirements to be used in place of

that titanium specified in the contracts," as the indictment alleged.

After ordering the non-conforming titanium, Cannon resigned

from his job and had no further role in the Government

contracts. (R3-57-59).

The Eleventh Circuit’s opinion makes no mention of the

other three overt acts charged in the indictment. None of these

acts could have formed the basis for a conspiracy conviction,

because the Government proved none of them beyond a

reasonable doubt.

Overt act A dealt with a 1986 contract for the manufacture

of Outboard Link Condition Control Transfers, which was not

covered by a separate count of the indictment. The Government

alleged that the contract did not comply with Military Standard

27643, “as specified in the contracts." (R1-11-2). However, the

requirement that the link assemblies comply with Military

Standard 27643 is not specified in the 1986 contract. (R1-73-3).

Overt act B.alleges that Cannon and others presented false DD

Form 250s to the Government. As the Eleventh Circuit held, the

Government failed to prove the existence of any false DD Form

250s. Overt act D deals with a 1989 link assembly contract, which

the Government admitted had been performed in full conformity

with the contract’s specifications, including Military Standard

27643, which was specifically included in the 1989 but not the

1986 contract. (R1-73-4).

99.10670001.P99 13

The Government’s evidence concerning an agreement to

commit an offense was also insufficient to sustain a conviction

pursuant to 18 U.S.C. §371. There are long-standing principles

and traditions concerning the sufficiency of proof of the parties’

agreement to conspire. Ingram v. United States, 360 U.S. 672, 3

L.Ed.2d 1503 (1959). Thus, the Government had to show beyond

a reasonable doubt that Cannon had the deliberate, knowing and

t . United States v. Jackson,

700 F.2d 181, 185 (Sth Cir. 1983). While the Government was

not required to prove that Cannon had knowledge of all details,

phases or aspects of the conspiracy, the Government was required

to show that Cannon knew the essential nature of the agreement.

United States v. Frink, 912 F.2d 1413, 1415 (11th Cir. 1990). Thus,

mere presence or mere association was an insufficient basis from

which a jury could infer intent or knowing participation in an

unlawful enterprise or agreement to conspire. United States v.

Camejo, 929 F.2d 610 (11th Cir. 1991); United States v. Catchings,

922 F.2d 777, 781 (11th Cir. 1991); United States v. Jackson, 700

F.2d 181, 185 (Sth Cir. 1983).

Furthermore, the concept of agreement and intent to

agree are intertwined, so that two types of intent must be proven

by the government: the intent to agree and the intent to commit

the substantive offense. United States v. Drougas, 748 F.2d 8, 15

(1st Cir. 1984); Arthur Pew Construction Co. v. Lipscomb, 965 F.2d

1559, 1576 (11th Cir. 1992). Courts will not lightly infer a

defendant’s knowledge and acquiescence in a conspiracy. United

States v. Jackson, 700 F.2d 181, 185 (Sth Cir. 1983). Therefore,

a showing that Cannon merely associated with those participating

in a conspiracy was insufficient evidence. United States v. Jackson,

Id. The Fifth Circuit Cort of Appeals stated the concept clearly:

...the government cannot prove a

conspiracy by presenting evidence that only places

the defendant in "a climate of activity that reeks of

something foul."

99.10670001.P99 14

- — a Oe =,

Jackson, 700 F.2d at 185.

Finally, United States v. Falcone, 311 U.S. 205, 85 L.Ed 128

(1940), addresses the essential nature of the agreement to

conspire as follows:

- » - One who without more furnishes supplies

to an illicit distiller is not guilty of conspiracy, even

though his sale may have furthered the object of

the conspiracy to which the distiller was a party,

but of which the supplier had no knowledge.

Id. at 210-211.

The Government's evidence was insufficient to prove all

elements of the offense of conspiracy beyond a reasonable doubt.

Reversal is required.

Il.

\

THE QUESTION OF THE APPLICABILITY OF A SET-OFF

FOR VALUE PROVIDED AS CONTEMPLATED BY

APPLICATION NOTE 7(a) OF U.S.S.G. §2F1.1(b)(1)(H)

HAS NOT BEEN ADDRESSED BY FEDERAL COURTS.

THIS IMPORTANT ISSUE SHOULD

BE RESOLVED BY THE SUPREME COURT.

The district court enhanced Cannon’s base offense level by

seven levels pursuant to §2F1.1(b)(1)(H) for a dollar loss to the

Government of $125,257.00. In calculating the amount of loss,

the court simply added together the value of the 1986 Link

Assembly Contract mentioned in Count I - the conspiracy count -

and the Titanium Armor Plate Contract charged in Count V.

(R9-6). On appeal, the Eleventh Circuit affirmed this finding.

The Eleventh Circuit noted that §2F 1.1 Application Note 7 of the

United States Sentencing Commission Guidelines Manual

99.10670001.P99 15

provides that "frequently, loss in a fraud case will be the same as

in a theft case." Cannon, 41 F.3d at 1466. The court also noted

that under U.S.S.G. §2B1.1, "where the market value is difficult

to ascertain or inadequate to measure harm to the victim, the

court may measure loss in some other way, such as reasonable

replacement cost to the victim." Jd. However, the district court’s

decision to use the contract value without regard to the value that

the Government received under the contract was clearly

erroneous.” The only way that the sentencing court’s method of

calculation could have been proper is that if upon acceptance and

payment but before using any of the parts, the Government

became aware of any problems with the parts and disposed of the

entire lot thereby receiving no benefit from them.

Application Note 7 (a) to U.S.S.G, §2F1.1, provides that

when the value of an item that does have some value is

misrepresented, the loss is the difference between the amount

paid and the product’s value. The Guidelines provide:

(a) Fraud involving misrepresentation of the

value of an item or product substitution. A fraud

may involve a misrepresentation of the value of an

item that does have some value (in contrast to an

item that is worthless). Where, for example, a

defendant fraudulently represents that stock is

worth $40,000.00 and the stock is worth only

$10,000.00, the loss is the amount by which the

stock was over-valued (i.e. $30,000.00). In a case

involving a misrepresentation concerning the quality

2 In its findings, the sentencing court stated, "the amount of

the loss is at least what the contract value was, $125,257.00. If I

were to try to give credit for the parts that have not yet failed or

that the Government is still using, it would be pure and rank

speculation, and the Court cannot engage in speculation." (R9-6).

99.10670001.P99 16

involving a misrepresentation concerning the quality

of a consumer product, the loss is the difference

between the amount paid by the victim for the

product and the amount for which the victim could

resell the product received.

Pursuant to Application Note 7 (a) to U.S.S.G. §2F1.1, Cannon

is entitled to a set-off or credit for the value of the items supplied

by Space Age and used by the Government. See United States v.

Schneider, 930 F.2d 555 (7th Cir. 1991).

The Government failed to prove that either the titanium

plates or the link assemblies did not perform up to standard. In

1992, Cannon himself advised the Government of possible

discrepancies in the 1986 Link Assembly Contract. By then, six

years had passed, and there had been an intervening 1989

contract reordering link assemblies. The testimony at trial (R6-

82, 83), showed that there were no reported failures of link

assemblies in the six year period. Furthermore, the evidence at

sentencing showed that in light of the six year time period, with

an intervening contract to resupply link assemblies along with the

rate at which link assemblies were changed out and discarded,

there were likely no link assemblies from the 1986 contract

remaining in service. (R8-47, 42-48). Therefore, the Government

had gotten the full use and service out of the product supplied

and had incurred no loss at all. (R8-42-48).

The sentencing court also considered the cost of the

titanium armor plate which was the subject matter of Count V of

the indictment. Cannon was acquitted of Count V as a matter of

law; this contract could not be used as a basis for enhancement.

The Eleventh Circuit tacitly recognized this fact when it stated,

"the sentencing court could properly consider the conduct charged

in Counts II-IV as well [as to more than minimal planning], so

long as the government proved them by the greater weight of the

evidence." Cannon, 41 F.3d at 1467 (emphasis added).

99.10670001.P99 17

Moreover, the testimony showed that the armor plate was

used by the Government for its intended purpose. Defendant’s

proffered testimony showed that the Government now allows

substitution of the type of titanium used in production of the

titanium armor plate which was the subject of Count V. (R6-57,

63-72). Furthermore, Defendant’s proffered testimony showed

that the very titanium used in the Count V contract was

subsequently ballistically tested and passed. (R6-48-50, R6-28-42).

In this case, replacement was not at issue because the

Government did not replace the armor plate, and in fact now

uses the same type of titanium provided by Space Age as an

essential equivalent of the ballistically tested titanium. Therefore,

the use of the face amount of the contracts, without providing a

set-off for the value of the products supplied, was an improper

method of calculation. .

The Government has not cited, and Petitioner has not

found, a case in this Court or any circuit addressing the

applicability of a set-off for value provided as contemplated by

Application Note 7 (a) of U.S.S.G. §2F1.1(b)(1)(H). This is a

sentencing issue of first impression, but one that is likely to recur.

Therefore, this Court’s consideration of this important question

is appropriate.

Ill.

IN ANY EVENT, THE CASE

MUST BE REMANDED FOR RESENTENCING.

Although the Eleventh Circuit reversed Cannon’s

conviction on Count V, the court permitted Cannon’s sentence to

stand, presumably because the district court had imposed

concurrent sentences on Count I and Count V. Cannon, 41 F.3d

at 1469. This was error. At sentencing, the district court

calculated the amount of loss by adding together the value of the

99.10670001.P99 18

1986 contract mentioned in Count I, and the titanium armor plate

contract charged in Count V. (R9-6). Because Cannon was

acquitted on Count V as a matter of law, the contract which was

the subject of Count V could not be used to enhance his

sentence. According to paragraph 18 of the Presentence Report,

the Government contracts totaled $115,000.00 for the link

assembly contract, plus $10,257.00 for the Count V titanium

contract. If $10,257.00 is subtracted from the $125,000.00 figure,

this results in a one offense level decrease. Had Cannon’s

offense level been 18 rather than 19, his sentencing range would

have been 27 to 33 months, rather than 30 to 37 months.

Although Cannon’s 30 month sentence is within the range of

sentences permitted for offense level 18, resentencing is necessary

because of the likelihood that the sentencing error affected the

length of his sentence. See Williams v. United States, 503 U.S.

193, 112 S.Ct. 1112 (1992).

Furthermore, the sentencing court’s "Statement of

Reasons" at page 5 of the district court’s Judgment (Appendix C)

is erroneous in that it states:

The sentence is within the guideline range, that

range does not exceed 24 months, and the court

finds no reason to depart from the sentence called

for by application of the guidelines.

Of course, Cannon was sentenced to 30 months

imprisonment. This discrepancy should be resolved on

resentencing, Resentencing would also permit the district court

to review other aspects of Cannon’s sentence in light of the

Eleventh Circuit’s other findings.

99.10670001.P99 19

CONCLUSION

For the foregoing reasons, Petitioner respectfully requests

that his Petition for Writ of Certiorari be granted.

Respectfully submitted,

IT P. HOUSE, JR.

Georgia Bar No. 369100

Attorney for Petitioner

SELL & MELTON

P. O. Box 229 3

Macon, Georgia 31297-2899

(912) 746-8521

99.10670001.P99 20

U.S. v. CANNON

UNITED STATES of America, Plaintiff-Appellee

v.

Jody CANNON, Defendant-Appellant.

7 No. 93-8498.

United States Court of Appeals, Eleventh Circuit

Jan. 6, 1995.

Former general manager of government contractor was

convicted in the United States District Court for the Middle

District of Georgia, No. CR92-41-MAC-DF, Duross Fitzpatrick,

J., 811 F.Supp. 1568, of conspiracy to defraud the United States

government, and of defrauding government by using false

documents, and he appealed. The Court of appeals, Fay, Senior

Circuit Judge, held that: (1) trial court was within its discretion

in excluding evidence of government’s metallurgical and ballistics

testing; (2) defendant’s offense level was properly computed at

sentencing; (3) evidence supported conspiracy conviction; (4)

conviction for using false documents to elicit payment on

government contracts was not supported by evidence; and (5)

prosecutor’s comments in closing argument were not improper or

prejudicial.

Affirmed in part, and reversed in part.

1. Criminal Law 1153(1)

On appeal from criminal conviction, reviewing court will

not disturb trial judge’s decision to admit or exclude evidence

absent clear showing of abuse of discretion.

Appendix A

2. Criminal Law 1139

On appeal from criminal conviction, sufficiency of

evidence, a question of law, is subjected to de novo review.

3. Criminal Law 1144.13(3)

In reviewing sufficiency of evidence to support conviction,

Court of Appeals views evidence in light most favorable to

government, including all reasonable inferences and credibility

judgments.

4. Criminal Law 1159.2(7)

In reviewing sufficiency of evidence to support conviction,

Court of Appeals asks whether reasonable trier of fact, when

choosing between reasonable constructions of evidence, could

have found defendant guilty beyond reasonable doubt.

5. Criminal Law 713

Prosecutorial conduct requires new trial only if remarks

were improper and prejudiced defendant’s substantive rights.

6. Criminal Law 1171.1(2.1)

In determining whether prosecutor’s remarks require new

trial, appeals court reviews them in context and assesses probable

jury impact.

7. Indictment and Information 60

Sufficiency of indictment is reviewed on appeal for whether

it contains every element of offense charged and adequately

informs accused of charge being lodged.

Appendix A

8. Criminal Law 1139, 1158(1)

Court of Appeals does not disturb sentencing court’s fact-

findings absent clear error, but reviews de novo sentencing court’s

application of sentencing guidelines to those facts.

9, Criminal Law 1313(1)

Sentencing court may consider defendant’s conduct not

covered by counts of conviction if government proves their

existence by greater weight of evidence.

10. Criminal Law 1044.1(7)

Defense motion for judgment of acquittal on seventh day

after jury discharge was sufficient to preserve for appeal counts

on which defendant was convicted. Fed.Rules.Cr.Proc.Rule 29(c),

18 USS.C.A.

11. Criminal Law 3883

Evidence that titanium seized from government contractor

passed government’s ballistics testing did not negate intent to

defraud, and thus could be excluded int rial of contractor’s

employee for conspiracy to defraud United States government

and for defrauding government with false documents, based on

allegations that defendant supplied and sought payment for

nonballistically tested titanium when contract required ballistically

tested titanium; that titanium passed ballistics test did not excuse

deceit in supplying nonballistically tested titanium as required by

contract. 18 U.S.C.A. §§371, 1001.

12. Conspiracy 45

Evidence of government-condoned substitutions in later

government contracts with other, unrelated parties does not affect

government's showing of intent to defraud, for purposes of

Appendix A

prosecution of government contractor for conspiracy to defraud

the United States government. 18 U.S.C.A. §§371, 1001.

13. Conspiracy 51

Fraud 69(1)

In sentencing employee of government contractor for

conspiracy to defraud United States government and for

defrauding government with false documents, sentencing court did

not clearly err in finding government’s monetary loss to be

contract value, and in increasing employee’s offense level

accordingly. 18 U.S.C.A. §§371, 1001; U.S.S.G. §§2F1.1, 2F1.1,

comment. (n.7), 18 U.S.C.A.App.

14. Conspiracy 51

In sentencing employee of government contractor for

conspiracy to defraud United States government with false

documents, sentencing court could properly consider conduct

charged in counts of which defendant was acquitted, and increase

defendant’s offense level accordingly for more than minimal

planning, where acts charged in conspiracy count involved

numerous contracts spanning four-and-half year period, and

government witness testified that defendant told her he altered

certification forms from other contracts to conceal substitution of

nonconforming material. 18 U.S.C.A. §371; U.S.S.G. §§1B1.1,

comment. (n.1), 2F1.1(b)(2)(1), 18 U.S.C.A.A.App.

15. Criminal Law 1254

In being sentenced for conspiring to defraud United States

government with false documents, employee of government

contractor was subject to increased offense level for conscious or

reckless risk of serious bodily injury, even if any injury had yet to

occur, where employee ordered nonballistically tested titanium,

contrary to contract specifications, to make armor plating on

military helicopters, and government witness testified that

Appendix A

employee told her inferior bearings had been substituted on

propelicr parts and that inferior bearings would crack under

pressure. 18 U.S.C.A. §371.

16. Conspiracy 47(6)

Evidence that government contractor’s general manager

placed bids, signed contracts, and knowingly purchased

nonconforming titanium for use in military helicopters, and that

manager and contractor’s president discussed that ordering

conforming titanium would cause contractor to lose money,

supported manager’s conviction for conspiring to defraud United

States government, even if contractor’s present "ordered" manager

to purchase nonconforming titanium; manager, and contractor as

president as unindicted coconspirators, gave government titanium

with less pecuniary value than product contracted for, and with

less performance value. 18 U.S.C.A. §371.

17. ‘Fraud 58(2)

Although government contractor’s general manager knew

that government contract to supply ballistically tested titanium

was not performed to specifications, manager’s conviction for

using false documents to defraud government was not supported

by evidence that manager submitted "DD 250" forms requesting

payment on contract, which government quality assurance

representative (QAR) signed, certifying that contractor met

contract specifications and deserved payment; manager did not

certify on DD 250 that parts supplied were conforming, and,

although QAR testified that he would not have signed DD 250

absent certification of conformity, only certification form in

contract file showed no signs of tampering and was for

nonballistically tested titanium. 18 U.S.C.A. §1001.

18. Criminal Law 720(7.1)

In prosecution of government contractor’s general manager

Appendix A

for conspiring to defraud United States government, based on

evidence that manager knowingly supplied nonballistically tested

titanium for use in military helicopters when government contract

called for ballistics testing, prosecutor did not act improperly in

closing argument by remarking that even if titanium could pass

ballistic test, "the only way you're going to know that is if you get

shot at"; prosecutor’s statement was correct, since after-the-fact

testing could not cure initial failure to supply tested titanium. 18

US.C.A. §371.

Appeal from the United States District Court for the

Middle District of Georgia.

Before COX, Circuit Judge, and FAY, Senior Circuit

Judge, and NELSON’, District Judge.

FAY, Senior Circuit Judge:

This appeal arises from Cannon’s two-count conviction for

conspiring to defraud the United States government and for

defrauding the government by using false documents. The jury

acquitted Cannon on three other counts. The indicted activity

involves improperly performed defense contracts for the United

States Air Force ("USAF").

Cannon alleges many errors in the trial and at sentencing.

First, Cannon alleges the trial judge abused his discretion by

excluding evidence of metallurgical and ballistics testing by the

government, in conjunction with this prosecution, long after the

contracts had been performed. Cannon also alleges the trial

judge abused his discretion in excluding evidence that the

government accepted nonballistically tested titanium as

“Honorable Edwin L. Nelson, U. S. District Judge for the

Northern District of Alabama, sitting by designation.

Appendix A

conforming in later contracts with other parties that called for

ballistically tested titanium. As to each of Cannon’s allegations,

we disagree.

Cannon alleges the evidence cannot support the conspiracy

conviction on Count I under 18 U.S.C. §371. We disagree, and

AFFIRM the conviction.

Cannon alleges the evidence cannot support the conviction

on Count V for using false documents to defraud the government

under 18 U.S.C. §1001. We agree, REVERSE the judgment, and

REMAND with instructions to enter a not guilty judgment as a

matter of law on Count V.

Cannon alleges the trial judge reversibly erred in admitting

video-tape of a C-130 airplane and its connecting link presented

at trial with live narration. We disagree.

Cannon alleges prosecutorial misconduct, spanning the

grand jury proceeding through closing argument, requires a new

trial. We disagree.

Cannon alleges the indictment failed to charge and the

evidence cannot support a conviction on the theory of aiding and

abetting. In light of our finding that the evidence does not prove

the DD 250 forms submitted to the government were false, we do

not reach the issue of whether Cannon would be guilty of aiding

and abetting had they been false.

Cannon alleges the trial judge wrongly computed his

offense level at sentencing, wrongly used the full contract price as

the amount of government loss, and wrongly found more than

minimal planning, conscious or reckless risk of serious bodily

injury, and an aggravating role as an organizer, leader, manager

or supervisor by Cannon. We disagree.

Appendix A

I. BACKGROUND

Jody Cannon was General Manager at Space Age

Manufacturing, Inc. ("Space Age"), in Warner Robins, Georgia,

for approximately twenty years. He was General Manager when

the indicted activity occurred.

Space Age contracted with the United States Air Force to

supply parts for military aircraft. Count I of the superseding

indictment charges Mr. Cannon with conspiring to defraud the

government and to use false documents to elicit payment on

government contracts that Cannon knew Space Age had not

performed to military specifications. The jury convicted Mr.

Cannon of this count (Count I). The superseding indictment also

charged, among other violations, ‘a substantive count (Count V)

of using false documents to elicit payment on contracts Cannon

knew were not performed to military specifications. The jury

convicted Mr. Cannon on this substantive count and acquitted

him on all other counts.

Both Counts I and V involved defense contracts between

Space Age and the USAF. Count I, the conspiracy count,

involved two types of parts the prosecution alleged did not

conform: First, a throttle link assembly, which is used to feather

a propeller on a C-130 aircraft.! Second, titanium armor plating

for H-53 helicopters which the contract required to be ballistically

tested--that is, to have defied penetration when shot with bullets.

Space Age knowingly supplied nonballistically tested titanium.

The indictment charges that Cannon, as General Manager,

submitted bids for government contracts and placed orders for

goods to fill those contracts. Cannon admits ordering the

\Feathering a propeller turns the propeller blades directly into

the wind. Feathering alleviates wind drag because the wind blows

through the blades instead of spinning them.

Appendix A

nonconforming titanium charged in Counts I and V in March of

1990. (R3-59; Appellant’s Br. at 5). After using materials that

did not conform to contract specifications, Space Age submitted

DD 250 forms to the government Quality Assurance

Representative ("QAR") for payment. The QAR reviews other

documents when receiving the DD 250 and signs the DD 250,

certifying that the contractor has met contract specifications and

deserves payment. The government argues that by presenting the

DD 250 to the QAR, Cannon "took affirmative actions to cause

the QAR to accept the items, and to certify that they met the

contract specifications, thereby causing the false documents to be

made." (Appellee’s Br. at 26). The substantive count depends on

whether this government argument is correct as a matter of law.

Il. STANDARD OF REVIEW

This appeal requires review of findings of fact, conclusions

of law, and discretionary rulings on whether to admit or exclude

evidence.

[1] We will not disturb the trial judge’s decision to

admit or exclude evidence absent a clear showing of abuse of

discretion. United States v. Russell, 703 F.2d 1243, 1249 (11th Cir.

1983).

[2-4] We subject sufficiency of the evidence, a question

of law, to de novo review. United States v. Kelly, 888 F.2d 732,

739 (11th Cir. 1989). We view the evidence in the light most

favorable to the government, including all reasonable inferences

and credibility judgments. See Glasser v. United States, 315 US.

60, 62 S.Ct. 457, 86 L.Ed. 680 (1942). We ask whether a

reasonable trier of fact, when choosing among reasonable

constructions of the evidence, could have found the defendant

guilty beyond a reasonable doubt. Kelly, 888 F.2d at 740.

[S, 6] Prosecutorial conduct requires a new trial only if we

find the remarks (1) were improper and (2) prejudiced Cannon’s

Appendix A

substantive rights. United States v. Cole, 755 F.2d 748, 767 (11th

Cir. 1985). We review them in context and assess the probable

jury impact. United States v. Stefan, 784 F.2d 1093, 1100 (11th

Cir. 1986).

[7] | We review the indictment’s sufficiency for whether

it contains every element of the offense charged and adequately

informs the accused of the charge being lodged. Stefan, 784 F.2d

1093, 1101-02 (11th Cir. 1986).

[8] We do not disturb the sentencing court’s fact

findings absent clear error. United States v. Davis, 902 F.2d 860,

861 (11th Cir. 1990). Nonetheless, we review de novo the |

sentencing court’s Federal Sentencing Guidelines application to |

those facts. United States v. Rodriquez, 959 F.2d 193 (11th Cir. |

1992), cert. denied. _ U.S.__, 113 S.Ct. 649, 121 L.Ed.2d 563 |

(1992).

[9] The sentencing court may consider defendant’s

conduct not covered by counts of conviction if the government

proves their existence by the greater weight of the evidence. See

United States v. Alston, 895 F.2d 1362, 1372-73 (11th Cir. 1990).

III. ANALYSIS

A. Procedure

[10] This Court at oral argument questioned whether

Cannon had waived appeal on Counts I and V by failing to move

for a judgment of acquittal on each of these counts. He did not.

Cannon moved for judgment of acquittal on August 27, 1993, the

seventh day after jury discharge. This motion is proper under

Fed.R.Crim.P. 29(c) and preserved the issues for appeal.

B. Evidentiary Rulings

[11] We find the trial judge did not abuse his discretion

Appendix A

by excluding evidence of metallurgical’ and ballistics testing by

the government. The record indicates the government, in

connection with Cannon’s prosecution, seized titanium from

Space Age in January of 1991. This titanium passed government

ballistics tests. Cannon argues that because the titanium passed

the ballistics test, it negates a finding of his intent to defraud the

government. We disagree.

(12] First, Cannon did not show the titanium seized in

the search came from the batch used to perform the contract

implicated in Count V. Indeed, the government witness, a Space

Age supplier, testified that she had no way of knowing whence

the titanium came, who bought it, who sold it, when or in

connection with what contract it was sold. (R3-129-30). Second,

even if Cannon had traced this titanium to the contract in Count

V, it would not matter. That the nonballistically tested titanium

supplied by Space Age later passed ballistics tests does not

pardon the deceit of having supplied nonconforming,

nonballistically tested titanium in a contract requiring ballistically

tested titanium. In short, titanium that could pass the ballistics

test is not equal to titanium that has passed the ballistics test.

The government contracted and paid for the latter; Space Age’s

substitution of the former, without government consent, does not

negate the government’s showing of intent to defraud. The trial

judge did not abuse his discretion in excluding evidence of these

after-the-fact, government-conducted tests. Likewise, evidence of

government condoned substitutions in later contracts with other,

unrelated parties does not affect the government's showing of

intent to defraud.

Further, we find the trial judge did not abuse his discretion

in admitting the C-130 aircraft videotape with live narration.

Metallurgical tests analyze metals and their properties in

bulk and at the atomic level. See The American Heritage

Dictionary of the English Language, 824 (New College Ed.1976).

Appendix A

C. Findings of Fact

[13] Upon review of the sentencing court’s fact findings,

we find no clear error. The sentencing court found the

government’s monetary loss to be the contract value. The United

States Sentencing Commission Guidelines Manual, §2F1.1

Application Note 7, states that "[f]requently, loss in a fraud case

will be the same as in a theft case." Further, §2F1.1 refers

"valuation of loss" to the discussion in §2B1.1, which provides that

"[w]here the market value is difficult to ascertain or inadequate

to measure harm to the victim, the court may measure loss in

some other way, such as reasonable replacement cost to the

victim." Following these instructions, we find the sentencing court

did not clearly err in finding the contract value was the amount

of loss. Having found the loss to be between $120,000 and

$200,000, the sentencing court properly increased Cannon’s

offense level by seven points. See §2F1.1(b)(1)(H).

[14] The sentencing court did not clearly err in

increasing Cannon’s offense level by two points for more than

minimal planning. Under §§2F1.1(b)(2)(A) and 1B1.1

Application Note 1(f), we find no clear error in increasing

Cannon’s offense level for "affirmative steps . . . taken to conceal

the offense." Agent Phillips testified that Cannon told her he

altered certification forms from other contracts to conceal the

substitution of nonconforming titanium. Further, Note 1(f) states

that more than minimal planning "is deemed present in any case

involving repeated acts over a period of time, unless it is clear

that each instance was purely opportune." The acts charged in

Count I involve numerous contracts spanning a four-and-a-half

year period. The law in this Circuit permits a sentencing court to

consider evidence of the defendant’s conduct rélating to

counts on which the defendant was indicted but acquitted

at trial[.]

Acquitted conduct may be considered by a

sentencing court because a verdict of acquittal

Appendix A

demonstrates a lack of proof sufficient to meet a beyond-

a-reasonable-doubt standard--a standard of proof higher

than that required for consideration of relevant conduct at

sentencing.

United States v. Averi, 922 F.2d 765, 765-66 (11th Cir. 1991).

Accordingly, the sentencing court could properly consider the

conduct charged in Counts II-IV as well, so long as the

government proved them by the greater weight of the evidence.

See United States v. Alston, 895 F.2d 1362, 1372-73 (11th Cir.

1990). Following the guidelines, we find the sentencing court did

not clearly err by increasing the offense level for "more than

minimal planning."

[15] Cannon argues the sentencing court erred in

increasing his offense level for "conscious or reckless risk of

serious bodily injury." We disagree. Cannon ordered

nonballistically tested titanium to make armor plating on H-53

helicopters. The USAF paid for titanium that had passed the

ballistics test, not titanium that might pass the test. Further,

Agent Phillips testified that Cannon told her "inferior bearings

had been substituted on the [connecting link assemblies used to

feather propellers on a C-130 aircraft] versus installing the

bearing that were called out for in the government specifications

... [and that] based on his 20 years experience in the aircraft

industry, that the inferior bearings would crack under pressure."

(R2-71). We find that the sentencing court did not clearly err

when it found the government had proved "conscious or reckless

risk of serious bodily injury" by the greater weight of the

evidence.’

*It is most reasonable to consider the loss of life or serious

bodily injury that can occur when essential parts of an aircraft

fail. To argue that there is no evidence of a failure yet is to

completely ignore the reason for the standards established in the

contracts, to wit: the safety of all personnel using the aircraft.

Appendix A

Finally, Cannon argues that the sentencing court

erroneously applied §3B1.1(c)--"aggravating role as an organizer,

leader, manager, or supervisor." We disagree. The Introductory

Commentary to §3B1.1

provides adjustments to the offense level based upon the

role the defendant played in committing the offense . . .

[which is determined] on the basis of all conduct within

the scope of §1B1.3 (Relevant Conduct), ie., all conduct

included under $1B1.3(a)(1)-(4), and not solely on the

basis of elements and acts cited in the count of conviction.

Based on this instruction and the laundry list of considerable

factors listed in §3B1.1 Application Note 4, we find the sentencing

court did not clearly err by increasing the offense level under this

section. .

D. Conclusions of Law

i. Count One: The Conspiracy Count

[16] The jury convicted Cannon under 18 U.S.C. §371

for "Conspiracy to commit offense or to defraud United States.”

The statute commands

[i]f two ore more persons conspire either to commit

an offense against the United States, or to defraud the

United States, or any agency thereof in any manner or for

any purpose, and one or more of such persons do any act

to effect the object of the conspiracy, each shall be fined

not more than $10,000 or imprisoned not more than five

years, or both.

The government identified Cannon’s unindicted coconspirators as

Space Age Manufacturing, Inc., and Space Age’s President, Jack

C. Kerstetter. Cannon placed bids, signed the contracts at issue,

and knowingly purchased nonconforming titanium. Cannon and

Appendix A

Kerstetter discussed that ordering conforming titanium would

cause Space Age to lose money. While Cannon argues that he

purchased the titanium because Kerstetter "ordered" him to do it,

this does not absolve his actions. Cannon, Space Age &

Kerstetter gave the USAF titanium with less pecuniary value than

the titanium it contracted for, and with less performance value

than the titanium it contracted for.

Viewing the evidence in the light most favorable to the

government, Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86

L.Ed. 680 (1942), including all reasonable inferences and

credibility judgments, we find that a reasonable trier of fact, when

choosing among reasonable constructions of the evidence, could

have found the defendant guilty beyond a reasonable doubt.

United States v. Kelly, 888 F.2d 732, 740 (11th Cir. 1989). We

affirm Cannon’s conviction on Count L

ii. Count Five: The Substantive Count

[17] Cannon argues the evidence cannot support a

conviction on Count V pursuant to 18 U.S.C. §1001. We agree.

The government had to prove Cannon knowingly and

willfully falsified, concealed or covered up by trick, scheme, or

device a material fact, or made false, fictitious or fraudulent

statements or representations, or made or used any false writing

or document knowing the same to contain any false, fictitious or

fraudulent statement or entry. See 18 U.S.C. $1001.

The government charged in the indictment that Cannon

violated $1001 because he "used and caused to be used a Form

DD 250j.]" Despite the jury verdict, as a matter of law, the

government failed to prove the DD 250 forms were false. The

government argues that "when [the contractor] submits the

document [DD 250, he] is telling the government that he has

manufactured the items according to the government

specifications, and that he is ready to delivery them so that he can

Appendix A

be paid." Appellee’s Br. at 25. Nowhere on the DD 250 does

Cannon or anyone at Space Age certify that the parts supplied

conform to the contract. Rather, the government QAR signs the

form signifying acceptance and conformance of the goods.

The government argues Cannon caused the QAR to make

a false statement by presenting the DD 250 forms, representing

to him that the contracts had been performed to specifications,

and having the QAR sign the DD 250, accepting the items and

certifying that they met the contract specifications. See id. at 25-

26. We disagree.

The government’s only shred of evidence to show the

QAR signed the DD. 250 forms because of false representations

was the QAR’s testimony that he would not have signed the DD

250 unless he’d been presented with a document certifying the

titanium as ballistically tested. Agent Phillips, however, testified

that when the government seized the file for the contract charged

in Count V, the only certification form it contained showed no

signs of tampering and was for nonballistically tested titanium

(R3-61-62). Although the titanium did not conform, the

documents did not lie. It was through the failure of the QAR to

perform an adequate review that the nonconforming material was

certified.

Viewing the evidence in the light most favorable to the

government, see Glasser, 315 U.S. 60, 62 S.Ct. 457, including all

reasonable inferences and credibility judgments, we hold that no

reasonable trier of fact, when choosing among reasonable

constructions of this evidence, could have found the defendant

guilty beyond a reasonable doubt of using false documents or

representations to defraud the government. See Kelly, 888 F.2d at

740. The district court reversibly erred when it denied Cannon’s

motion for judgment of acquittal on Count V.

Appendix A

E. Miscellaneous

i. Prosecutorial Misconduct

[18] The transcript of the government’s closing argument

shows no prosecutorial remarks that either (1) were improper or

(2) prejudiced Cannon’s substantive rights. (R6-157-65); see

United States v. Cole, 755 F.2d 748, 676 (11th Cir. 1985). The

Assistant United States Attorney, Ms. Duke, contrary to Cannon’s

argument on appeal, did not argue that the titanium supplied by

Space Age "would not work or perform under fire." Appellant’s

Br. at 13. Rather, she argued that the titanium "may indeed pass

a ballistic tests [sic], but the only way you're going to know that

is if you get shot at." (R6-156). Ms. Duke’s statement is correct.

After-the-fact testing cannot cure the initial failure to supply

tested titanium. Indeed, we stress that the record shows the only

ballistics testing on this titanium was done by the government in

connection with this prosecution. Moreover, as discussed in IIL.B.,

the titanium that passed the tests has not been proved to be

related to the batch used in performing the contracts. At this

point, the Air Force can only hope such is the case.‘

Accordingly, we find the remarks were proper, and when

reviewed in context, assessing the probable jury impact, we find

no prejudice to Mr. Cannon’s substantive rights. See Stefan, 784

F.2d 1093, 1100 (11th Cir. 1986). The district court properly

denied Cannon’[[s motion for a mistrial. Finding no merit to any

of Cannon’s prosecutorial misconduct allegations, we deny his

request for a new trial.

li. Indictment Sufficiency

Based on our findings in III.D.ii. that the DD 250 forms

‘By now, most of the ball bearings in the link assemblies may

have been tested.

Appendix A

cannot support a conviction under 18 U.S.C. $1001, and resulting

reversal of Count V, we need not discuss whether the indictment

sufficiently charged aiding and abetting in that count.

IV. CONCLUSION

We hold that the district court (1) did not abuse its

discretion in ruling on evidence; (2) did not clearly err in its fact

findings; (3) properly denied Cannon’s motion for a mistrial; (4)

properly denied Cannon’s motion for a judgment of acquittal on

County I; and (5) reversibly erred, as a matter of law, when it

denied cannon’s motion for a judgment of acquittal on Count V.

We REVERSE and REMAND with instructions to enter a not

guilty judgment as a matter of law on Count V. The judgment of

the district court as to Count I is affirmed.

AFFIRMED in part; REVERSED in part.

Appendix A

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 93-8498

FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

[ MAR 29 1995 ]

MIGUEL J. CORTEZ

CLERK

UNITED STATE OF AMERICA,

Plaintiff-Appellee,

versus

JODY CANNON,

Defendant-Appellant.

On Appeal from the United States District Court for the

Middle District of Georgia

ON PETITION(S) FOR REHEARING AND

SUGG S(S) OF RE ING EN BANC

Before: COX, Circuit Judge, and FAY, Senior Circuit Judge, and

NELSON*, District Judge.

Appendix B

PER CURIAM:

( XX ) The Petition(s) for Rehearing are DENIED and no

member of this panel nor other Judge in regular active service on

the Court having requested that the Court be polled on rehearing

en banc (Rule 35, Federal Rules of Appellate Procedure;

Eleventh Circuit Rule 35-5), the Suggestion(s) of Rehearing En

Banc are DENIED.

ee The Petition(s) for Rehearing are DENIED and the

Court having been polled at the request of one of the members

of the Court and a majority of the Circuit Judges who are in

regular active service not having voted in favor of it (Rule 35,

Federal Rules of Appellate Procedure; Eleventh Circuit Rule 35-

5), the Suggestion(s) of Rehearing En Banc are also DENIED.

C4 A member of the Court in active service having

requested a poll on the reconsideration of this cause en banc, and

a majority of the judges in active service not having voted n favor

of it, Rehearing En Banc is DENIED.

ENTERED FOR THE COURT:

UNITED STATES CIRCUIT JUDGE

*Honorable Edwin L. Nelson, U.S. District Judge for the

Northern District of Alabama, sitting by designation.

Appendix B

UNITED STATES DISTRICT COURT

Middle District of Georgia

Macon Division

Filed 2:06 p.m.

APR -5 1993

si N

Deputy Clerk U.S. District Court

Middle District of Georgia

UNITED STATE OF AMERICA

v. Case Number CR 92-4l-MAC-DF

Jody Cannon

Defendant.

JUDGMENT IN A CRIMINAL CASE

(For Offenses Committed On or After November 1, 1987)

The defendant, Jody Cannon, was represented by Mitchel

House, Macon, Georgia.

The defendant was found guilty on count(s) 1 and 5 after

a plea of not guilty. Accordingly, the defendant is adjudged guilty

of such count(s), involving the following offense(s):

Title & Nature of Date Offense | Count |

Section | Offense Concluded Number(s) |

Conspiracy to 3/12/91 1

falsify Dept. of

Air Force

Documents

Falsify Dept. of

Defense

Documents

Appendix C

As pronounced on 3/24/93, the defendant is sentenced as

provided in pages 2 through 5 of this Judgment. The sentence is

imposed pursuant to the Sentencing Reform Act of 1984.

It is ordered that the defendant shall pay to the United

States a special assessment of $100.00, for count(s) 1 and 5, which

shall be due immediately.

It is further ordered that the defendant shall notify the

United States Attorney for this district within 30 days of any

change of name, residence, or mailing address until all fines,

restitution, costs, and special assessments imposed by this

Judgment are fully paid.

The defendant has been found not guilty on count(s) 2, 3

and 4 and is discharged as to such count(s).

Signed this the _5_- day of April, 1993.

[signed by Judge Fi ick]

Duross Fitzpatrick

United States District Judge

Defendant’s SSAN: 221-32-2656

Defendant’s Date of Birth: 10/25/54

Defendant’s address:

295 Fairgrounds Road, Warner Robins, GA 31093

Appendix C

Defendant: Jody Cannon Judgment--Page 2 of 5

Case Number: CR 92-41-MAC-DF

IMPRISONMENT

The defendant is hereby committed to the custody of the

United States Bureau of Prisons to be imprisoned for a term of

30 months on each of Cts. 1 and 5 to run concurrently for 30

months. :

The defendant shall surrender for service of sentence at

the institution designated by the Bureau of Prisons as directed by

the U.S. Probation Office.

RETURN

I have executed this Judgment as follows:

Defendant delivered on to

at ,withacertified

copy of this Judgment.

United States Marshal

By:

Deputy Marshall

Appendix C

Defendant: Jody Cannon Judgment--Page 3 of 5

Case Number: CR 92-41-MAC-DF

SUPERVISED RELEASE

Upon release from imprisonment, the defendant shall be

on supervised release for a term of 3 years.

While on supervised release, the defendant shall not

commit another federal, state, or local crime; shall not illegally

possess a controlled substance; shall comply with the standard

conditions that have been adopted by this court (set forth below); .

and shall comply with the following additional conditions:

1. If ordered to the custody of the Bureau of Prisons, the

defendant shall report in person to the probation office in

which the defendant is released within 72 hours of release

from the custody of the Bureau of Prisons.

2. If this judgment imposes a fine, special assessment, costs,

or restitution obligation, it shall be a condition of

supervised release that the defendant pay any such fine,

assessments, costs, and restitution that remain unpaid at

the commencement of the term of supervised release.

3. The defendant shall not own or possess a firearm or

destructive device.

STANDARD CONDITIONS OF SUPERVISION

While the defendant is on supervised release pursuant to

this judgment: :

1) The defendant shall not leave the judicial district without

the permission of the court or probation officer.

2) The defendant shall report to the probation officer as

directed by the court or probation officer and shall submit

Appendix C

3)

4)

5)

6)

7)

8)

9)

10)

11)

12)

13)

a truthful and complete written report within the first five

days of each month.

The defendant shall answer truthfully all inquiries by the

probation officer and follow the instructions of the

probation officer.

The defendant shall support his or her dependents and

meet other family responsibilities.

The defendant shall work regularly at a lawful occupation

unless excused by the probation officer for schooling,

training, or other acceptable reasons.

The defendant shall notify the probation officer within

seventy-two hours of any change in residence or

employment.

The defendant shall refrain from excessive use of alcohol

and shall not purchase, possess, use, distribute or

administer any narcotic and other controlled substance, or

any paraphernalia related to such substances.

The defendant shall not frequent places where controlled

substances are illegally sold, used, distributed, or

administered.

The defendant shall not associate with any persons

engaged in criminal activity, and shal) not associate with

any person convicted of a felony unless granted permission

to do so by the probation officer.

The defendant shall permit a probation officer to visit him

or her at any time at home or elsewhere and shall permit

confiscation of any contraband observed in plain view by

the probation officer.

The defendant shall notify the probation officer within

seventy-two hours of being arrested or questioned by a law

enforcement officer.

The defendant shall not enter into any agreement to act

as an informer or a special agent of a law enforcement

agency without the permission of the court.

As directed by the probation officer, the defendant shall

notify third parties or risks that may be occasioned by the

defendant’s criminal record or personal history or

Appendix C

characteristics, and shall permit the probation officer to

make such notifications and to confirm the defendant’s

compliance with such notification requirement.

Appendix C

Defendant: Jody Cannon Judgment--Page 4 of 5

Case Number: CR 92-41-MAC-DF

FINE

It is the Court’s judgment that the defendant is unable and

not likely to become able to pay all or part of a fine even with

the use of a reasonable installment schedule; therefore, the Court

waives the fine as well as any alternative sanctions in this case.

The Court is also waiving the additional fine requiring that

defendant pay the cost of imprisonment and/or supervision fee.

Appendix C

Defendant: Jocy Cannon Judgment--Page 5 of 5

Case Number: CR 92-41-MAC-DF

STATEMENT OF REASONS

The court adopts the factual findings and guideline

application in the presentence report except the Court ruled that

the amount of loss was $125,257 which would yield an increase of

7 levels pursuant to USSG 2F1.1(b)(H).

Guideline Range Determined by the Court:

Total Offense Level: 19

Criminal History Category: 1

Imprisonment Range: 30 months to 37 months

Supervised Release Range: 2 to 3 years

Fine Range: $ 6,000 to $ 60,000

Restitution: $ 0 (waived due to inability to

pay)

The fine is waived or is below the guideline range because

of the defendant’s inability to pay.

Restitution is not ordered due to defendant’s inability to

pay.

The sentence is within the guideline range, that range does

not exceed 24 months, and the court finds no reason to depart

from the sentence called for by application of the guidelines.

Appendix C

CERTIFICATE OF SERVICE

This is to certify that I have this day served three true and

correct copies of the foregoing document upon the following

party by depositing same in the United States Mail, postage

prepaid and properly addressed to insure delivery to:

Solicitor General

Department of Justice

Washington, D.C. 20530

Miriam Duke

Sharon T. Ratley

United States Attorney’s Office

P. O. Box U

Macon, Georgia 31202-U

This 23rd day of June, 1995.

A

; og

MITGHEL P. HOUSE, JR.

‘ Georgia Bar No. 369100

OF COUNSEL:

SELL & MELTON

1400 Charter Medical Building

P. O. Box 229

Macon, Georgia 31297-2899

(912) 746-8521