# Petition for Writ of Certiorari — Cannon v. United States

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1995
- **Citation:** 516 U.S. 823

## Text

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
Ce ee DS ree pa wwaewetabaces i
ee ee Pee EE ee oc 6 8 ce 0 0 00 8 crew eee VR iv
SS Se ae Pe ne 1
EE es Wg EG eee Ge eee a 1
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

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STATUTES
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WG ULB AA Seed occ heh. ce (unr pea senha oe ee 3, 4
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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386012_1976%3A1. Public record. Not legal advice.