Petition for Writ of Certiorari — Dula v. United States

NO.

. IN THE

SUPREME COURT OF THE UNITED STATES

October Term 1992

UNITED STATES OF AMERICA,

Respondent,

Vv.

LANDEN MAX DULA and

ACCRABOND CORPORATION,

Petitioners.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

Steven E. Farese

Counsel of Record

Anthony L. Farese

Farese, Farese & Farese

Post Office Box 98

Ashland, Mississippi 38603

(601) 224-6211

Attorneys for the Petitioners

QUESTIONS PRESENTED FOR REVIEW

1. Did the prosecutor violate

Petitioner Dula’s fifth amendment right

not to testify by commenting in closing

argument to the jury, after Dula elected

not to testify, that no one appeared on

the stand to testify regarding the legal

dispute between Dula and a former sup-

plier, which the defense contended had in

bad faith instigated the criminal inves-

tigation against Dula and Accrabond?

2. Did the trial court err in per-

mitting the introduction of evidence of

alleged prior bad acts committed by Peti-

tioners Dula and Accrabond under Rule

404(b) of the Federal Rules of Evidence?

3. Was the evidence insufficient to

support the convictions of the Peti-

tioners because the government failed to

produce adequate evidence to prove that

the Petitioners had the intent to de-

fraud?

4. Did the district court err in

concluding that the weight of the evi-

dence supported the convictions?

-ii-

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW... i

TABLE OF AUTHORITIES ........ Vv

Cane “EEMPET 5 6 « «© «© «© © @© © @ 1

nnn «6 6 6 *# ss © «© «© @ @ 1

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED ...... 1

STATEMENT OF THE CASE ....... 5

ARGUMENT

a THE PROSECUTOR VIOLATED

THE FIFTH AMENDMENT RIGHTS

OF DEFENDANT DULA BY COM-

MENTING ON HIS FAILURE

a rn &+ & *& «& «© 8 6 6 26

se. THE TRIAL COURT ERRED IN

PERMITTING THE INTRODUC-

TION OF EVIDENCE OF

ALLEGED PRIOR BAD ACTS

COMMITTED BY DULA AND

ACCRABOND UNDER RULE

404(B) CF THE FEDERAL

RULES OF EVIDENCE ..... 32

-iii-

Iil.

IV.

E_O ON TS (CONT’D

THE EVIDENCE WAS INSUFFI-

CIENT TO SUPPORT THE CON-

VICTIONS OF THE PETITION-

ERS BECAUSE THE GOVERNMENT

FAILED TO PRODUCE ADEQUATE

EVIDENCE TO PROVE THAT THE

PETITIONERS HAD THE INTENT

TO DEFRAUD ...« «+s « e

THE TRIAL COURT ERRED IN

RULING THAT THE WEIGHT OF

THE EVIDENCE SUPPORTED THE

CONVICTIONS «© «© © & & @ *

CONCLUSION . . .« « © «© «© « e

APPENDIX

whten

Page

38

TABLE OF AUTHORITIES

Cases

Brady v. Maryland, 373 U.S. 83

>) ee ae ee ee

Griffin v. California, 380 U.S.

ait Sere eee

United States v. Beechum, 582

F.2d 898 (5th Cir. 1978),

cert. denied, 440 U.S.

920 (1979) .

United States v. Borchardt, 809

F.2d 1115 (5th Cir. 1987)

United States v. Dothard, 666

F.2d 498 (11th Cir. 1982)

United States v. Enzor, 820 F.2d

684 (5th Cir. 1987)

United States v. Harbin, 601

F.2d 773 (5th Cir. 1979)

United States v. Lavelle, 751

F.2@ 1266 (D.C. Cir.),

cert. denied, 474 U.S.

Shy Cael 4. « « & ho

United States v. Morales, 902

F.2d 604 (7th Cir.),

amended, 910 F.2d 467

(7th Cir. 1990)

-V=

34,

26

35

26

35

37

27

34

42

TABLE OF AUTHORITIES (CONT’D)

Cases Page

United States v. Pecora, 693

P.24 421 (5th Cir. 1982) .... . 40

United States v. Sardelli, 813

F.a@ 636 (Sth Cis, i967)... . 28, 38

United States v. Shaw, 555

F.2d 1295 (5th Cir. 1977) a oe ee ee

United States v. Shively, 927

F.2d 804 (5th Cir.),

cert. denied, 111 S. Ct.

2806 (1991) ae ae oe ey ae oe oe ee ee

United States v. Smith, 890 F.2d

711 (5th Cir. 1989) “ee eT ae ae ee ee CT

United States v. St. Gelais,

952 F.2d 90 (5th Cir.

SOS. a ee ee ee ee

United States v. Wiley, 846

F.2d 150 (2d Cir. 1988) ‘is. «+ ee « 2e

Williams v. Lane, 826 F.2d 654

(Fee CSP: ESSTE nc Se hak ks a eee

Statutes

2) MaBsh. § 1001 . 2:4, 6S 8 2 eee eee

BO Mamas § 23941 - 6-6 ee Oe eee

ang =

TABLE OF AUTHORITIES (CONT’D)

Statutes Page

ie Beene Car 3, 5, 40

ee Pines 6 Bee a a Skee Secs ¢ » 1

om Damen © Beee £40454 ws hoe * « 6

Fed. R. Evid. 403 a ee ee ee ee x

Fed. R. Evid. 404(B) ......... 33

-vili-

OPINIONS BELOW

The Petitioners were convicted after

a trial by jury on becember 12, 1991.

The convictions were affirmed by the

United States Court of Appeals for the

Fifth Circuit in an opinion issued on

April 16, 1993, which is set forth in the

Appendix at A-1.

JURISDICTION

The jurisdiction of this Court is in-

voked pursuant to 28 U.S.C. § 1254(1).

The final disposition of this case below

was the Fifth Circuit’s decision affirm-

ing the convictions of the Petitioners,

issued on April 16, 1993.

CONSTITUTIONAL AND

STATUTORY PROVISIONS INVOLVED

The fifth amendment to the United

States Constitution states in pertinent

part:

No person shall .. . be com-

pelled in any criminal case to be

a witness against himself, nor be

deprived of life, liberty, or

property, without due process of

law[.]

18 U.S.C. § 1001 provides:

Whoever, in any matter within

the jurisdiction of any depart-

ment 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 not more than

$10,000 or imprisoned not more

than five years, or both.

18 U.S.C. § 1341 states:

Whoever, having devised or

intending to devise any scheme or

artifice to defraud, or for ob-

taining money or property by

means of false or fraudulent pre-

tenses, representations, or prom-

ises, or to sell, dispose of,

loan, exchange, alter, give away,

distribute, supply, or furnish or

procure for unlawful use any

counterfeit or spurious coin, ob-

ligation, security, or other ar-

ticle, or anything represented to

be or intimated or held out to be

such counterfeit or spurious ar-

ticle, for the purpose of execut-

ing such scheme or artifice or

attempting so to do, places in

any post office or authorized de-

pository for mail matter, any

matter or thing whatever to be

sent or delivered by the Postal

Service, or takes or receives

therefrom, any such matter or

thing, or knowingly causes to be

delivered by mail according to

the direction thereon, or at the

place at which it is directed to

be delivered by the person to

whom it is addressed, any such

matter or thing, shall be fined

not more than $1,000 or im-

prisoned not more than five

years, or both. If the violation

affects a financial institution,

such person shall be fined not

more than $1,000,000 or im-

prisoned not more than 30 years,

or both. .

18 U.S.C. § 1343 states:

Whoever, having devised or

intending to devise any scheme or

artifice to defraud, or for ob-

taining money or property by

means of false or fraudulent pre-

tenses, representations, or prom-

ises, transmits or causes to be

transmitted by means of wire,

radio, or television communica-

tion in interstate or foreign

commerce, any writings, signs,

Signals, pictures, or sounds for

the purpose of executing such

scheme or artifice, shall be

fined not more than $1,000 or im-

prisoned not more than five

years, or both. If the violation

affects a financial institution,

such person shall be fined not

more than $1,000,000 or im-

prisoned not more than 30 years,

or both.

Federal Rule of Evidence 403 pro-

vides:

Although relevant, evidence

may be excluded if its probative

value is substantially outweighed

by the danger of unfair preju-

dice, confusion of the issues, or

misleading the jury, or by con-

Siderations of undue delay, waste

of time, or needless presentation

of cumulative evidence.

Federal Rule of Evidence 404(b) pro-

vides:

Evidence of other crimes, wrongs,

or acts is not admissible to

prove the character of a person

in order to show action in con-

formity therewith. It may, how-

ever, be admissible for other

purposes, such as proof of mo-

tive, opportunity, intent, prep-

aration, plan, knowledge, iden-

tity, or absence of mistake or

accident, provided that upon re-

quest by the accused, the pros-

ecution in a criminal case shall

provide reasonable notice in ad-

vance of trial, or during trial

if the court excuses pretrial no-

tice on good cause shown, of the

general nature of any such evi-

dence it intends to introduce at

trial.

STATEMENT OF THE CASE

Proceedings Below

The Petitioners, Landen Max Dula and

Accrabond Corporation, were accused in a

32-count indictment dated May 16, 1991,

of various acts of fraud, mail fraud, and

wire fraud in violation of 18 U.S.C. §§

1001, 1341, and 1343. Dula and Accrabond

were tried ina jury trial in the United

States District Court for the Northern

District of Mississippi, Western Divi-

sion, the Honorable Neal B. Biggers, Jr.,

presiding, on December 2 to 12, 1991.

Dula was acquitted on the majority of

counts, but was convicted on counts 11,

i2, i3, 19, 20, 25, 26, 29, 30,.31, and

32. Accrabond was acquitted on count 1

but was convicted on counts 2 to 32. In

an order entered on February 21, Dula was

sentenced to a term of imprisonment of 36

months on each count, to be served con-

currently, plus a fine of $27,500.

Accrabond received a sentence of a fine

in the amount of $248,000 and was re-

quired to pay restitution in the amount

of $8,238.32. On appeal, the Fifth Cir-

cuit affirmed the convictions, but did

not address the issue raised by Dula that

the government had violated his due proc-

ess rights under Brady v. Maryland, 373

U.S. 83 (1963), by failing to disclose

exculpatory evidence (App. at A-1). The

court of appeals ruled that an adequate

record had not been developed on this is-

sue, and directed the Petitioners to file

a motion to set aside their sentence pur-

Ssuant to 28 U.S.C. § 2255.

lisceneesaaeeenanaiaaemaneniiiiel

Statement of Facts

Accrabond Corporation is a Tennessee

company with offices located in Olive

Branch, Mississippi, which is in the

business of distributing adhesives, seal-

ants, and glues to aerospace manufac-

turers across the country. Landen Max

Dula is the owner and president of Accra-

bond. The indictment against Dula and

Accrabond alleged that in the period be-

tween January 1988 and September 1989,

Accrabond engaged in a scheme which was

intended to defraud its customers by se-

cretly substituting inferior products for

those ordered by the customers. More

specifically, the government alleged that

on numerous occasions Accrabond acquired

stale or expired products, altered and

repackaged them, and sold them as new ma-

terials. In addition, the government

claimed that Accrabond fraudulently sent

products manufactured by a different com-

pany than the products ordered, and

created new labels to disguise what was

being sent. As part of this scheme, the

government alleged, Accrabond issued

false certificates of compliance regard-

ing the materials it sold.

At trial the government introduced

evidence concerning transactions with

thirteen manufacturers: General Dynam-

ics, Fas-Tronics, Metricase Corp., Beech

Aerospace Services, TACA International

Airlines, Beckett Enterprises, Jet Fleet

Corp., Aircraft Supplies, DME Corpora-

tion, Simmons Airlines, Tracor Aerospace,

LTV Aerospace and Defense Company, and

Martin-Marietta. In attempting to prove

its allegations, the government presented

33 witnesses, including present and for-

mer employees of Accrabond and various

representatives of the manufacturers that

ha eenereeeeemeeeeemaemamammaaaiasiiiiaiiiaiiaaiel

were allegedly defrauded. The govern-

ment’s primary witness was Mary Lee, an

employee of Accrabond for 17 years who

currently acts as office manager for the

company. Lee testified that during the

period alleged in the indictment, Accra-

bond was a company which was growing rap-

idly and experiencing greatly increased

sales. At one point, Lee estimated that

Accrabond received 20,000 orders per

year. Lee testified that Dula had tried

to create an atmosphere in which Ac-

crabond employees were to please their

customers and correct any mistakes which

they might make.

Lee described in great detail the

process by which Accrabond received or-

ders, produced computer-generated work

orders, invoices, and packing slips,

filled and packed the orders, and sent

orders to customers. Essentially, the

-10-

process consisted of telephone orders or

faxed orders taken down in handwriting by

Lee and other personnel at Accrabond.

These handwritten notes were then entered

into Accrabond’s computer by data entry

clerks, which then immediately created a

sales copy, work order, and packing slip.

After the order was filled, an invoice

would be generated and sent.

The prosecutor took Lee through the

series of orders that comprised the 32

counts of the indictment in order to at-

tempt to demonstrate that fraudulent sub-

stitutions were made in the orders. With

regard to the allegation in count 1, con-

cerning a General Dynamics order dated

January 19, 1988, Lee testified that a

request for a product called Proseal 870

A-1/2, which met military specification

81733, came in by telephone. Lee trans-

ferred her handwritten notes to an order

-l1l1l-

pad, which was then entered into the com-

puter. Lee explained that the com-

puterized order form contained a blank

for notations regarding the order, and

that based on what had been supplied

earlier to General Dynamics for the same

type of order, the computer printed out a

notation that Accrabond had previously

shipped a different product called GC 450

A-2. Lee explained that GC 450 A-2,

manufactured by Goal Chemical, was an

alternative product cross-referenced by

the United States Government as being an

equal product, with the exception being

the amount of time one could work with

the material. Lee could not recall spe-

cifically if she had discussed the alter-

nate product with General Dynamics’ buy-

ing agent, Keith Cartwright, with regard

to this particular order, but stated that

discussing alternate products informally

-12-

was very common. In answer to the ques-

tion of why the Proseal product appeared

on the label, Lee explained that it was

on the computer that way from the order

and Accrabond occasionally left the orig-

inally requested item on the label so

that the receiving departments of the

customers could process the material

without difficulty. In other words, the

companies often were structured so that

buyers would agree to accept alternative

products but it was so difficult to get

the company to change the paperwork to

accept the alternative that the product

was simply sent as the originally ordered

item. The government later introduced

testimony from officials of General Dy-

namics named Shepherd Barnett and Paul

Gradowski, who each testified that Ac-

crabond was a good supplier and that they

had no information that any products

-13-

shipped by Accrabond had caused any prob-

lems. While these officials each indi-

cated that it was not a policy of their

company to accept alternative products,

the specifics of the order at issue could

not be discussed with certainty because

the General Dynamics buyer, Keith Cart-

wright, had suffered a stroke and was un-

available for testimony.

Lee’s testimony with regard to the

other orders at issue was essentially the

same. Lee next discussed an order from

Fas-Tronics for RTV 3145 in gray, a Dow-

Corning product. On the order form pre-

pared by the computer, the notation

stated, “send actual 3145 gray or see LMD

for color on Mobay 400 neutral.” Lee ex-

plained that the order was a rush order

and stated that she assumed that she

cleared the possibility of sending an al-

ternative product with the Fas-Tronics

-14-

buyer. The government produced no evi-

dence that the Dow-Corning product was

not actually sent, and the buyer for Fas-

Tronics, William Hutchins, testified that

he had no knowledge that his company had

received anything other than the origin-

ally ordered material. Similarly, an of-

ficial of Barber-Coleman, the company to

which Fas-Tronics had sold the material,

testified that there was nothing to indi-

cate that the LTV 3145 was not the prod-

uct they received. Hutchins also stated

that his company continued to do business

with Accrabond up to the present.

Lee also testified as to the circum-

stances underlying the orders from Metri-

case, Beech Aerospace, TACA International

Airlines, Beckett Enterprises, Jet Fleet,

Aircraft Supplies, Simmons Airline, Mar-

tin-Marietta, DME Corporation, Tracor,

and LTV Aerospace. Officials from these

-15-

companies also testified as to the orders

and materials subsequently received. In

each case, these officials conceded that

they could not be sure that they received

a substitute or alternative product, and

in each case there were no complaints

that could be attributed to the sub-

stitution of one product for another.

While some company officials identified

problems with materials received by Ac-

crabond, such as Leroy Hixon from Beckett

Enterprises and Rodney Crosby of Beech

Aerospace, these officials had no infor-

mation that the products which did not

perform as expected were anything other

than what they ordered. Several wit-

nesses testified that their products made

with material sent by Accrabond had per-

formed well, such as Patrick McLaughlin,

a procurement specialist with GTE, which

had obtained component parts from DME

-16-

Corporation for military products used in

the Gulf War. A Martin-Marietta procure-

ment official, Larry Thompson, testified

that his company could indeed accept an

alternative product if it met the mili-

tary specification for the product or-

dered, as long as that product was ap-

proved by the company’s program engineer-

ing department, and Sherwin LeFranc of

TACA International Airlines testified

that he might well have discussed a sub-

stitute product in connection with his

order.

Lee further explained that Accrabond

was engaged in a lengthy legal dispute

with Products Research Chemical (PRC),

the manufacturer of several of the prod-

ucts which it distributed. As Lee

stated, Accrabond distributed PRC prod-

ucts for eight years in the geographic

\ area around Mississippi and became such a

-17-

successful distributor that PRC sought to

terminate the relationship and distribute

its products directly to the companies

which Accrabond had cultivated as cus-

tomers. Accrabond was able to sell to

these nearby companies at a lower cost

than PRC was charging because of its low

overhead and convenient location. When

PRC did terminate the distributorship,

Accrabond protested and a lawsuit ensued.

The government also relied on testi-

mony from numerous former employees of

Accrabond in its attempt to establish its

case. The jury heard testimony from em-

ployees who held a variety of positions

ranging from vice president to clerk.

Callie Hudson, an employee from 1986 to

1989, testified that she took several of

the orders alleged in the indictment, and

initially testified that she was told by

Mary Lee and Max Dula to indicate to the

-18-

manufacturing department when products

should be substituted. On cross-examina-

tion, however, Hudson conceded that she

just assumed that Dula knew of the prac-

tice of sending substitutions and did not

have any direct evidence to this effect.

Hudson also stated that she was unsatis-

fied at Accrabond because she did not get

pay raises she believed she should get.

Thomas Holmes, an administrative as-

sistant from 1985 to 1988, testified that

there was a practice of substitution at

the company, and as examples of dis-

reputable practices at Accrabond testi-

fied that the company had received ex-

pired and waste products from John

Shelley Company and Martin-Marietta, and

repackaged and sold them as new products.

When presented with documents from these

companies on cross-examination, however,

Holmes conceded that he had simply as-

-19-

sumed that the products were all expired

and waste products, but in fact the prod-

ucts were really surplus products or, in

the case of John Shelley Company, were

fresh products which Accrabond could not

buy from the manufacturer because of a

legal dispute. Holmes further testified

that he could not recall a single time

when Dula told him to send out an expired

item.

Carol Boyd Hayes, an employee from

1987 to 1990, repeated the assertion that

Accrabond sent out expired material ac-

quired from Martin-Marietta, as did John

Cooper. However, the evidence estab-

lished that the Martin-Marietta material

was in fact mostly surplus material which

was given to Accrabond only because Mar-

tin-Marietta had no use for it, not be-

cause it was defective or outdated. This

was shown by the testimony of Richard

-20-

Lewis, the Accrabond employee who ar-

ranged for the transfer of the Martin-

Marietta material, and by John Taylor, an

engineer at Martin-Marietta. Chandler

Shelley, head of John Shelley Company,

testified that his company sent PRC ma-

terial to Accrabond after removing the

expiration dates and lot numbers, and

that this alteration to the label was

made not because the material was bad or

expired, but in order to protect its dis-

tributorship from retaliation by PRC,

which refused +o permit Accrabond to

handle its products because of an ongoing

legal dispute concerning Accrabond’s dis-

tribution of PRC products.

Other employees who testified as to a

pattern of substitution of products in-

cluded Richard Lewis, who developed the

computer program used to handle orders

and shipments. It was Lewis who created

————

-21-

the system by which blind notes could be

placed on the order forms and not appear

on the invoices sent to customers. Lewis

testified that Dula directed that sub-

stitution of products be made, and that

false certificates of compliance were

sent out. Lewis also identified a log-

book in which substitutions on particular

orders were recorded. The entries in

this logbook ended the day Lewis left the

company. Prior statements of Lewis to

investigators revealed that Lewis told

the investigators that the logbook would

convict Dula. Lewis conceded that, after

leaving Accrabond, he worked in violation

of his contractual covenant not to com-

pete with Accrabond. John Cooper, a

sales representative at Accrabond between

1987 and 1989, claimed that he consulted

Dula on all orders and that substitutions

were made 30-40% of the time. On cross-

-22-

examination, however, Cooper acknowledged

that he had filed a Qui Tam lawsuit

against Accrabond and Dula, hoping to get

a percentage of any funds recovered from

a fraud prosecution of Dula. In addi-

tion, Cooper admitted lying on his ap-

plication for unemployment compensation

by stating that he was fired when in fact

he simply walked off the job without

telling anyone. Other Accrabond em-

ployees testified about the logbook, but

no one could explain why it was not kept

after Lewis left. The credibility of

these employees was put into question by

evidence that they either filed Qui Tam

lawsuits, and thus had a financial in-

terest in the conviction of Dula and Ac-

crabond, or had other conflicts with

Dula.

The government’s witness concerning

military specifications and whether al-

-23-

ternative products would meet those spec-

ifications was Philip House, a retired

employee of the Air Force. On cross-

examination, House admitted that he cur-

rently works for Morton International, a

sealant company that is the chief sup-

plier of PRC. In fact, when House re-

tired from the Air Force, PRC threw a re-

tirement party in his honor. House ac-

knowledged that he concealed from the

grand jury the truth about his employment

with Morton International when he testi-

fied on behalf of the government. House

stated that he did no tests to determine

the validity of his conclusions regarding

alleged Accrabond substitutions.

At the close of the government’s

evidence, defense counsel made a motion

for judgment of acquittal which was

denied by the trial judge. The evidence

put on by the defense consisted of the

-24-

testimony of two Accrabond employees,

Felicia Williams and Donna Beesinger, who

stated that Dula did not have an active

role in the ongoing activities at Accra-

bond and did not discuss any policy of

substitution with them.

The closing argument of defense coun-

sel emphasized the extremely circumstan-

tial nature of the government’s evidence,

with the only witnesses who testified as

to Dula’s involvement in secret substitu-

tions being those who had economic or

other motives for attacking Dula. De-

fense counsel reminded the jury that

there was no direct evidence from the

customers of Accrabond that they had re-

ceived substituted products, and no evi-

dence demonstrated that anything sent by

Accrabond was faulty or inadequate be-

cause it was substituted material. In

the government’s closing statement, the

—————————— eee

-25-

prosecutor refuted the contention that no

Accrabond product was faulty, stating

that there was no way to test this claim

since the materials had already been ap-

plied to products made by Accrabond cus-

tomers. The prosecutor specifically re-

futed the argument of defense counsel

that the government’s expert, Philip

House, could have tested Accrabond prod-

ucts by saying that there was no way to

test the products. In response to the

evidence concerning the ongoing legal

dispute between PRC and Accrabond, the

prosecutor also told the jury that

“{(tjhere’s been nobody on this witness

stand that really knows about what hap-

pened between PRC and Accrabond Corpora-

tion” (Tr. at 1784). Defense counsel im-

mediately objected that this statement

was a comment about Dula’s decision not

to testify, but the objection was over-

alana

-26-

ruled without either a caution to the

prosecutor or an instruction to the jury.

ARGUMENT

Ze THE PROSECUTOR VIOLATED

THE FIFTH AMENDMENT

RIGHTS OF DEFENDANT DULA

BY COMMENTING ON HIS

FAILURE TO TESTIFY.

The fifth amendment prohibits a pro-

secutor from commenting directly or in-

directly on a defendant’s failure to tes-

tify. Griffin v. California, 380 U.S.

609 (1965); United States v. Borchardt,

809 F.2d 1115 (5th Cir. 1987). In decid-

ing whether a comment made by the govern-

ment in its closing argument is a comment

against the defendant’s failure to tes-

tify, a court must determine if “it can

be said that the prosecutor’s manifest

intention was to comment upon the ac-

cused’s failure to testify [or] was

of such character that the jury would

-27-

naturally and necessarily take it to be a

comment on the failure of the accused to

testify.” United States v. Smith, 890

F.2d 711, 717 (Sth Cir. 1989). Oblique

comments on a defendant’s failure to tes-

tify, if sufficiently suggestive, can be

as pernicious and as unlawful as direct

comments. United States v. Harbin, 601

F.2€ 773, 777 (Sth Cir. 1979).

In this case, the statement made by

the prosecutor in his closing argument

can only be characterized as one intended

to draw attention to the decision of Dula

not to testify. In referring to the

legal dispute between Dula and PRC, which

was described by Mary Lee, the prosecutor

stated that ”{t]jhere’s been nobody on

this witness stand that really knows

about what happened hetween PRC and Ac-

crabond Corporation” (Tr. at 1784). De-

fense counsel made an immediate objection

-28-

and moved for a mistrial, but this re-

quest was denied without even a caution-

ary instruction to the jury. The clear

effect of the statement was to direct the

jury’s attention to the fact that Dula,

who would be the person that the jury

would assume knew about the details of

the dispute between Accrabond and PRC,

did not choose to explain his story.

Consequently, the jury could easily have

drawn an adverse conclusion from the

prosecutor’s statement that contributed

to his conviction, particularly in light

of the fact that the court did not even

caution the jury that the prosecutor’s

statement was improper.

In a Similar casé, the Fifth Circuit

reversed the governmental fraud convic-

tion of the defendant in United States v.

Sardelli, 813 F.2d 654, 657 (5th Cir.

1987), in part because the prosecutor

-29-

told the jury in his final argument that

defense counsel did not “want the whole

thing brought out to you.” Although this

statement was made in response to defense

counsel’s statement that the defense had

called no witnesses because of the weak-

nesses in the government’s case, the

court concluded that the prosecutor’s

statement was prejudicial, emphasizing

that in the context of that particular

case the prosecutor could only have been

referring to the defendant in his com-

ment, since he was the most knowledgeable

witness.

In Williams v. Lane, 826 F.2d 654

(7th Cir. 1987), the court granted a

habeas corpus petition in a rape case in

which the prosecutor had made a statement

that was construed to be a comment on the

defendant’s failure to testify. The de-

fense had argued that the victim had con-

-30-

sented because she and the defendant had

known each other socially prior to the

alleged rape. In response, the prose-

cutor stated: ”Who got up on this wit-

ness stand and told you these two were

dating?” Id. at 665. The court con-

cluded:

([T)his Court has previously rec-

ognized that closing arguments

regarding uncontradicted testi-

mony which could have been rebut-

ted by either the defendant or

another witness are nonetheless

impermissible because they "could

have called attention to [the de-

fendant’s]) failure to testify on

any issue--and thus to his fail-

ure to contradict much of the

testimony which could not have

been contradicted by anyone but

him.” United States v. Poole,

379 F.2d at 649 (quoted in Burke,

756 F.2d at 1301, and Buege, 578

F.2d at 189 n. 1).

The prosecutor’s indirect

references to petitioner’s

failure to testify were clearly

improper and violated the Fifth

Amendment. As in Burke, the com-

ments were “likely to cause the

jury to view the closing argument

as a commentary on the defend-

-31-

ant’s failure to testify and as a

suggestion to view that failure

to testify as indicia of guilt.”

756 F.2d at 1302.

The words found to be prejudicial in

Williams v. Lane, supra, are very similar

to those at issue in this case. In view

of the dearth of evidence regarding

Dula’s alleged intent to defraud, see

Arguments III and IV, infra, the prej-

udice resulting from the prosecutor’s

comment can only be deemed to have had an

impact on the decision of the jury to

convict Dula and Accrabond. Accordingly,

both Dula and Accrabond are entitled to a

new trial based on this trial error.

-32-

rs. THE TRIAL COURT ERRED IN

PERMITTING THE INTRODUC-

TION OF EVIDENCE OF AL-

LEGED PRIOR BAD ACTS COM-

MITTED BY DULA AND ACCRA-

BOND UNDER RULE 404(b) OF

THE FEDERAL RULES OF EVI-

DENCE.

During the course of testimony from

Rick Drexler, laboratory manager at Ac-

crabond during the time period at issue

in this case, the government was per-

mitted to elicit testimony concerning a

sale of materials to Pan Metals, a Korean

corporation. Over objection from defense

counsel, Drexler told the jury that Pan

Metals had ordered a Dow-Corning adhesive

but had been sent a substitute product

made by General Electric that was in

stock. Drexler further stated that “it

did not get by,” meaning that the sub-

stitution was noticed by Pan Metals.

This transaction was not among those al-

leged in the indictment.

-33-

Rule 404(b) of the Federal Rules

of Evidence provides:

Evidence of other crimes,

wrongs, or acts is not admis-

sible to prove the character of a

person in order to show action in

conformity therewith. It may,

however, be admissible for other

purposes, such as proof of mo-

tive, opportunity, intent, prep-

aration, plan, knowledge, iden-

tity, or absence of mistake or

accident, provided that upon re-

quest by the accused, the pros-

ecution in a criminal case shall

provide reasonable notice in ad-

vance of trial, or during trial

if the court excuses pretrial no-

tice on good cause shown, of the

general nature of any such evi-

dence it intends to introduce at

trial.

In addition, Rule 403 states:

Although relevant, evidence

may be excluded if its probative

value is substantially outweighed

by the danger of unfair preju-

dice, confusion of the issues, or

misleading the jury, or by con-

siderations of undue delay, waste

of time, or needless presentation

of cumulative evidence.

Taken together, these rules form a two-

part test for determining the propriety

of admitting evidence of “bad acts” not

-34-

alleged in the indictment. As stated in

United States v. Beechum, 582 F.2d 898,

911 (5th Cir. 1978), cert. denied, 440

U.S. 920 (1979):

First, it must be determined that

the extrinsic offense evidence is

relevant to an issue other than

the defendant’s character. Sec-

ond, the evidence must possess

probative value that is not sub-

stantially outweighed by its un-

due prejudice and must meet the

other requirements of rule 403.

(Footnote omitted.) Of course, the dan-

ger of admitting evidence of other crimes

or bad acts is that the jury may convict

on a basis other than what has been al-

leged in the indictment. Generally

speaking, the similarity of other bad

acts evidence to the charged offenses in-

creases the danger the jury will confuse

the issues necessary to convict the de-

fendant. United States v. Lavelle, 751

F.2d 1266 (D.C. Cir.), cert. denied, 474

U.S. 817 (1985).

adden

A number of courts have utilized the

two-part Beechum test to conclude that

defendants have been unfairly prejudiced

by the admission of other bad acts evi-

dence. For example, in United States v.

Dothard, 666 F.2d 498 (11th Cir. 1982),

the defendant was charged with violating

18 U.S.C. § 1001 by willfully making a

false statement on an Army enlistment ap-

plication. At trial, the government in-

troduced evidence that the defendant had

previously made a false statement on a

driver’s license application. The court

concluded that even if the fact that the

defendant had lied on both applications

was probative of some intent to deceive

with regard to the crime charged, the

probative value of the evidence was far

outweighed by its prejudicial impact.

The same conclusion was reached in

United States v. Sardelli, supra, in

-36-

which the court criticized the government

prosecutor for introducing an indictment

containing dismissed charges into evi-

dence at the defendant’s trial for making

false statements in a loan application.

Similarly, in United States v. Wiley, 846

F.2d 150 (2d Cir. 1988), a prosecution

for mail and wire fraud, the court found

error in the fact that the trial court

permitted the introduction into evidence

of an earlier state court order which

showed that the defendants had made

fraudulent statements in connection with

a business deal. While the court order

was in fact relevant to an issue at trial

because it was probative on the issue of

whether a particular codefendant had

knowingly lied when he told one person

that another defendant was an honest man

who had never cheated anyone, the court

found that the statement was unduly

|

=-37=

prejudicial under Rule 403. As the court

noted, the risk that the jury would be-

lieve that the defendant had a propensity

to engage in fraudulent schemes out-

weighed the probative value of the evi-

dence. See also United States v. Enzor,

820 F.2d 684 (5th Cir. 1987) (extrinsic

offense testimony of postal inspector

concerning money-order violations at

prison where defendant was inmate was not

relevant to defendant’s prosecution for

falsely altering money orders, was highly

prejudicial, and denied defendant his

right to a fair trial).

As these cases show, the admission of

testimony concerning a supposedly

fraudulent transaction not alleged in the

indictment was unfairly prejudicial to

Dula and Accrabond. This conclusion is

particularly mandated by the fact that

the Pan Metals evidence purported to show

-38-

that materials were substituted and not

accepted, something that was not shown by

any other evidence introduced by the

government. Because of the unfairly

prejudicial nature of this evidence, Dula

and Accrabond were denied their right to

a fair trial.

ee © THE EVIDENCE WAS INSUFFI-

CIENT TO SUPPORT THE CON-

VICTIONS OF THE PETITION-

ERS BECAUSE THE GOVERN-

MENT FAILED TO PRODUCE

ADEQUATE EVIDENCE TO

PROVE THAT THE PETITION-

ERS HAD THE INTENT TO

DEFRAUD.

To obtain convictions of Dula for the

crimes alleged in counts 11, 12, 13, 19,

25, and 29, wire fraud under 18 U.S.C. §

1341, the government was required to

prove beyond a reasonable doubt that Dula

used or aided and abetted the use of the

wires in furtherance of a scheme to de-

fraud. United States v. Shively, 927

niet

-39-

F.2d 804 (5th Cir.), cert. denied, 111s.

Ct. 2806 (1991) (to obtain mail fraud

conviction, government must prove scheme

or artifice to defraud, specific intent

to defraud, and use Of mails for purpose

of executing scheme); United States Vv.

Shaw, 555 F.2d 1295 (Sth Cir. 1977)

(Same; wire fraud). However, a review of

the record reveals that with regard to

these allegations, the government failed

to present sufficient proof of any

Specific intent to defraud on the part of

Dula at any time prior to the use of the

wires. At best, the government showed

only that orders were Placed with Accra-

bond by telephone or FAx machine, and

that following these Orders a decision

may have been made in a particular case

to substitute an alternative product made

by another manufacturer in lieu of the

precise product Ordered. Even assuming

-40-

that the government demonstrated that

there was fraud involved in these trans-

actions, which the Petitioners strongly

deny, the government’s proof does not

show that the intent to defraud preceded

the use of the wires, as is required for

a violation of 18 U.S.C. § 1343. See

United States v. Pecora, 693 F.2d 421

(5th Cir. 1982) (the use of the wires

must be intended to execute a scheme to

defraud).

Moreover, the government’s evidence

did not demonstrate beyond a reasonable

doubt that substitutions of one product

for another were in fact made, for the

representatives of the manufacturers who

testified could not state with any as-

surance that they received anything other

than what they had ordered from Accra-

bond. Thus, the element of fraud was not

Ef]

t

$

{

-4 1-

shown with regard to the facts demon-

strated by the government.

Even if the government did in fact

demonstrate that alternative products

were provided, however, this would not

suffice to prove any fraudulent scheme.

To be convicted of wire fraud, a defend-

ant must not only intend to defraud or

deceive, but he must iiee intend for some

harm to result from his deceit. United

States v. St. Gelais, 952 F.2d 90 (5th

Cir. 1992). As Mary Lee’s testimony in-

dicated, the facts support the conclusion

that if substitutions were made, Accra-

bond could have made these substitutions

in good faith with the intention of pro-

viding an equal product to that which was

ordered. Therefore, even when consider-

ing the facts in a light most favorable

to the government’s position, a finding

-42-

of wire fraud on these counts is not per-

missible.

IV. THE TRIAL COURT ERRED IN

RULING THAT THE WEIGHT OF

THE EVIDENCE SUPPORTED

THE CONVICTIONS.

Following the jury verdict in this

case, defense counsel submitted a motion

for new trial based in part on the argu-

ment that the guilty verdicts were

against the weight of the evidence. This

motion was denied by the district court.

While a trial judge is given considerable

discretion in determining whether to

grant a new trial in the interests of

justice, he may not abuse his authority

by denying a motion for new trial when it

is clearly appropriate. United States v.

Morales, 902 F.2d 604 (7th Cir.),

amended, 910 F.2d 467 (7th Cir. 1990)

(reversing trial court’s denial of motion

for new trial based on the conclusion

-43-

that the weight of the evidence at trial

did not support the defendant’s convic-

tion).

In this case, the government’s proof

WaS SO weak concerning the existence of

an intent to defraud that it Simply can-

not be said that the weight of the evi-

dence supported the convictions of Accra-

bond and Dula. Rather, the witnesses who

testified that there was some sort of

scheme to defraud at Accrabond were all

persons who had conflicts with Dula or

who had some monetary stake in the

outcome of the case. These inherently

untrustworthy witnesses were simply too

unreliable to support a criminal convic-

tion, particularly in light of the fact

that none of the manufacturers’ repre-

sentatives who testified could state that

they had received any products with defi-

Cciencies which could be attributed to the

-44-

substitution of inferior products. From

the perspective of Dula and Accrabond,

the policy of Accrabond was to provide

its customers with quality products with-

in the time required. The facts at trial

showed that if alternative products were

selected, these products were of the same

quality as those ordered and performed in

the same manner.

Therefore, a close review of the rec-

ord in this case indicates that the trial

court abused its discretion by declining

to find that, based on the entirety of

the evidence, the convictions were not

supported by the weight of the evidence.

PONG Rag EA es calli he em

ge ee ees

-4 5-

CONCLUSION

For all of the foregoing reasons, the

Petitioners, Landen Max Dula and Accra-

bond Corporation, request this Court to

grant their Petition for Writ of Certi-

orari.

Respectfully submitted,

Steven E. Farese

Counsel of Record

Anthony L. Farese

Farese, Farese & Farese

Post Office Box 98

Ashland, Mississippi 38603

(601) 224-6211

Attorneys for the Petitioners

NO.

IN THE

SUPREME COURT OF THE UNITED STATES

October Term 1992

UNITED STATES OF AMERICA,

Respondent,

Wi

LANDEN MAX DULA and

ACCRABOND CORPORATION,

Petitioners.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

APPENDIX

Steven E. Farese

Counsel of Record

Anthony L. Farese

Farese, Farese & Farese

Post Office Box 98

Ashland, Mississippi 38603

(601) 224-6211

Attorneys for the Petitioners

TABLE OF CONTENTS

OPINION OF THE FIFTH CIRCUIT

U.S. Court of Appeals

FILED

April 16, 1993

RICHARD E. WINDHORST, JR.

Clerk

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

UNITED STATES oF AMERICA,

Plaintiff-Appellee,

versus

LANDEN MAX DULA and ACCRABOND CORPORATION,

Defendants-Appellants.

ae

Appeal from the United States District

Court for the Northern District of

Mississippi

Ne

ee

Before KING and EMILIO M. GARZA, Circuit

Judges, and HALL, District Judge.

SAM B. HALL, JR., District Judge:

Landen Max Dula and Accrabond Cor-

poration were convicted by a jury of wire

fraud, mail fraud, and false statements.

Defendants now appeal their convictions,

alleging a Brady violation, a comment on

the failure of Dula to testify, and a

violation of Fed. R. Evid. 404(b). De-

fendants also allege that the evidence

was insufficient to prove Dula’s intent

to defraud, and that the trial court

erred in denying a motion for new trial

because the verdict was against the

weight of the evidence. As the Brady

claim is not presented in the record, it

is dismissed without prejudice to the de-

fendants’ right to raise it in an action

“District Judge of the Eastern Dis-

trict of Texas, sitting by designation.

under 28 U.S.C. § 2255. As to all other

issues, we find no error, and affirm.

I. FACTS AND PROCEDURAL HISTORY

Landen Max Dula is the founder and

president of Accrabond Corporation, which

is engaged in the sale of industrial

sealants, adhesives, coatings, and other

chemical products for military, govern-

ment, and commercial aerospace use. Ac-

crabond manufactured its own line of

products, and distributed products of

other manufacturers.

On May 16, 1991, Dula and Accrabond

were indicted in the Northern District of

Mississippi on charges of wire fraud,

mail fraud, and false statements. The 32

count indictment charged that between

January 1988 and September 1989, the de-

fendants devised a scheme to defraud and

obtain money under false pretenses by

representing that products sold and sup-

plied conformed to the purchaser’s speci-

fications when they did not. Defendants

were also charged with fraudulently sub-

stituting falsely identified and noncon-

forming products,’ relabeling stale, out-

dated, and expired products as fresh, re-

cently acquired products with extended

shelf life,’ coloring, thinning, and al-

tering the appearance of products to con-

form to the appearance of other products

and substituting the[{m] for other prod-

*Many aerospace products carry manu-

facturer’s lot numbers to provide a mech-

anism for a manufacturer to trace and re-

call defective lots. Accrabond provided

its own lot numbers, or purchased small

quantities of a product in order to ob-

tain an authentic lot number.

*Most aerospace products such as

those sold by Accrabond carry a shelf

life, beyond which they must be retested

to determine whether they still meet the

standards of performance prescribed by

military specifications.

_

ucts,” and using false labels, shipping

documents, and certificates of compliance

to conceal the fraudulent substitution of

products.”

The indictment alleged eighteen in-

stances of the use of interstate wire

communications in violation of 18 U.s.c.

§§ 2, 1343, and one of the mail in viola-

tion of 18 U.S.C. §§ 2, 1341 in execution

“Any alteration of a product after

manufacture, such as thinning, dying,

etc. may also change performance, and

therefore also requires retesting to de-

termine if the product still meets the

military specifications.

"Most of Accrabond’s business was

conducted by telephone or fax transmis-

sions, which were then entered into a

computer, which generated a sales order

and a manufacturing order. The order

form also had a Space for entering “blind

notes,” which were used to instruct Ac-

crabond employees on what substitute to

send for the product Ordered, or what

substitute had been supplied to the cus-

tomer on a previous order. The documents

sent to the customer, however, all de-

scribed the product Ordered, and did not

reveal that a substitute had been sup-

plied.

of a scheme to defraud thirteen aerospace

and defense supply companies.® The in-

dictment further charged the defendants

with thirteen counts of falsely certify-

ing products for use in defense contracts

in violation of 18 U.S.C. §§ 2, 1001.

After a ten day jury trial in Decem-

ber, 1991, Accrabond was convicted on all

but one count of wire fraud, and Dula was

convicted on six counts of wire fraud and

five counts of false statements. On Feb-

ruary 18, 1992, Accrabond was sentenced

to pay a fine of $248,000, and restitu-

tion in the amount of $8,238.32. Dula

was sentenced to a term of imprisonment

of thirty-six months on each count, to be

‘The defendants were charged with

illegally using wire communications when

accepting telephone purchase orders from

various customers. Further, the defend-

ants allegedly submitted false statements

or entries by supplying fraudulent cer-

tificates of compliance indicating that a

particular product conformed to a par-

ticular military specification.

served concurrently, as well as a fine of

$27,500. The defendants filed a notice

of appeal February 24, 1992, from the

judgments entered by U.S. District Judge

Neal B. Biggers, Jr., and the court

stayed execution of the judgment pending

appeal.

II. ANALYSIS

A. BRADY VIOLATION

Defendants contend that the govern-

ment violated the disclosure requirements

of Brady v. Maryland, 373 U.S. 83 (1963),

by failing to reveal test results showing

that the product sold by Accrabond per-

formed as well as was required.’ Defend-

"In Brady v_ Maryland, 373 U.S. 83,

87 (1963), the United States Supreme

Court held that the due process clause

requires the government to disclose all

information that is favorable to the ac-

cused and is material to either guilt or

punishment. See generally 3 Wright,

Federal Practice and Procedure: Criminal

2d, § 557.2 (1982). The rule covers im-

peachment as well as exculpatory evi-

dence. See Giglio v. United States, 405

ants claim that the government was in

possession of numerous reports of such

tests, which it failed to disclose de-

spite repeated requests prior to trial.

Specifically, Defendants pointed to in-

spection and testing done by Martin-

Marietta, as stated by a company spokes-

man the day after the convictions. See

Northeast Mississippi Daily Journal, Sun-

day, December 15, 1991. Defendants al-

lege that this violation prejudiced them

by denying them exculpatory materials in

trial preparation and presentation, and

by permitting the prosecutor to make

false statements in closing argument re-

garding the impossibility of inspecting

the products supplied by Accrabond.®

U.S. 150, 154 (1972).

°In closing argument, counsel for

the Defendants argued that while the

government had alleged that faulty prod-

ucts sold by Accrabond had endangered the

performance of weapons such as the cruise

bonseeeeeeeesieeneemnaeassaaasaamasataammaaammammmiaiiiitel

EON Cr eg ae cet Oe Rn oe eer

The government argues that it has

not violated the requirements of Brady

Since_-the information was equally avail-

able to the Defendants,’ and the informa-

tion is not material.’®° We decline to

missile, the demonstration of the effec-

tiveness of our country’s military tech-

nology in the Persian Gulf War, including

missiles made with materials sold by Ac-

crabond, showed that the products were

not deficient. (Tr. 1755). In response,

the prosecutor stated in rebuttal that

only an inspection of the materials could

have revealed what problems there might

have been with Accrabond products, and

asserted that such an inspection would

have been impossible. (Tr. 1775-1776).

°'”)Brady does not oblige the Gov-

ernment to provide defendants with evi-

dence that they could obtain from other

sources by exercising reasonable dili-

gence. [. . .] When evidence is avail-

able equally to the defense and the pros-

ecution, the defendants must bear the re-

sponsibility for their failure to dili-

gently seek its discovery.” See, e.g.,

United States v. McKenzie, 768 F.2d 602,

608 (5th Cir. 1985), cert. denied, 474

U.S. 1086 (1986) [citation omitted].

A defendant must establish that -

withheld evidence favorable to the ac-

cused is “material” in order to succeed

on a Brady claim. See United States v.

Ellender, 947 F.2d 748, 756 (5th Cir.

address these arguments at this time be-

cause, as indicated by oral argument,

there is no evidence in the record con-

cerning the test results that the govern-

ment is alleged to have withheld in vio-

lation of Brady. In the absence of a

record, we cannot fairly evaluate the

merits of the defendants’ claim. We

therefore dismiss the defendants’ Brady

1991). Suppressed evidence is material

only if “there is a reasonable probabil-

ity that, had the evidence been disclosed

to the defense, the result of the pro-

ceeding would have been different. A

‘reasonable probability’ is a probability

sufficient to undermine confidence in the

outcome.” United States v. Bagley, 473

U.S. 667, 682 (1985).

In this case, the government argues

that whether or not some of Accrabond’s

products were not fraudulent or noncon-

forming was not at issue, and is in fact

irrelevant. Rather, the issue was

whether the products were falsely repre-

sented and certified. See, e.g., United

States v. Grimm, 568 F.2d 1136, 1138 (5th

Cir. 1978) (evidence of noncriminal con-

duct to negate the inference of criminal

conduct is generally irrelevant); United

States v. Marrero, 904 F.2d 251, 260-261

(Sth Cir. 1990), reh. denied, 909 F.2d

1479, cert. denied, 498 U.S. 1000.

Fe ee eee ae ee, ey ee ee ee

Rly h Lea tare SOG EDS whe SFI

&

Bt pe AT he WAAR MDE AN BEMIS hte SA inn Mens ie ua

claim without prejudice to their right to

raise the issue in a proceeding under 28

U.S.C. § 2255.*' See 3 Wright, Federal

Practice and Procedure: Criminal 2d §

594 p. 453.

B. COMMENT ON DULA’S FAILURE TO TESTIFY

Dula also contends that the trial

court erred when it denied a motion for

mistrial following a statement by the

prosecutor in closing argument that it[s]

claims called the jury’s attention to the

fact that the [sic] Dula had elected not

to testify. Dula argues that the failure

of the trial court to declare a mistrial,

“This is similar to our procedure

for ineffective assistance of counsel

Claim. Where such claims are not raised

before the trial court, they cannot be

resolved on direct appeal since the dis-

trict court -has had no opportunity to de-

velop the record as to the merits of the

allegations. See, e.g., United States v.

Higdon, 832 F.2d 312, 313-314 (5th Cir.

1987), cert. denied, 484 U.S. 1075

(1988); United States v. Bounds, 943 F.2d

541 (5th Cir. 1991).

or at least give a curative instruction,

denied him his Fifth Amendment rights.

The Fifth Amendment prohibits a

prosecutor from commenting directly or

indirectly on a defendant’s failure to

testify. Griffin v. California, 380 U.S.

609 (1965); United States v. Borchardt,

809 F.2d 1115 (5th Cir. 1987). In decid-

ing whether a comment made by the govern-

ment in its closing argument is a comment

on the defendant’s failure to testify, a

court must determine if “the prosecutor’s

manifest intention was to comment on the

accused’s failure to testify [or] was

- - »- Of such character that the jury

would naturally and necessarily take it

to be a comment on the failure of the ac-

cused to testify.” United States v.

Smith, 890 F.2d 711, 717 (5th Cir. 1989).

However, the comments complained of

must be viewed within the context of the

trial in which they are made. United

States v. Bright, 630 F.2d 804, 826 (5th

Cir. 1980). In this case, one of the de-

fenses set forth by Dula and Accrabond

was that the prosecution was instigated

and directed by a rival, Products Re-

search Chemical Corporation (PRC), to

carry out the “corporate murder” of Ac-

crabond in order to take over its market.

Against this background, Government coun-

sel stated in closing argument:

Well, let me talk about

PRC just a minute. There’s

been nobody on this witness

stand that really knows about

what happened between PRC and

Accrabond Corporation.

(Tr. 1784). The government argues that

the context makes clear that the intent

of the argument was not to comment on

Dula’s failure to testify, but to make

the point that none of the witnesses who

had testified about the existence of a

lawsuit by PRC against Accrabond actually

knew anything about it.

It is not error to comment on the

defendant’s failure to produce evidence

on a phase of the defense upon which he

seeks to rely. See, e.g., United States

v. Bright, 630 F.2d 804, 825 (5th Cir.

1980). Thus, the government’s argument

to the jury that “no one has given you

any reasonable explanation” in response

to the defendant’s contentions is not er-

ror. See United States v. Warren, 550

F.2d 219, 227 (5th Cir. 1977), cert.

enied, 434 U.S. 1016 (1978).

In any case, the district court’s

instructions to the jury emphasized that

the defendant need not testify, and that

no inference could be drawn from his

failure to testify. (Tr. 1082). MThere-

fore, even if there was harm created by

counsel’s comments, it was offset by the

OLY STR.

court’s instructions. See, e.g., United

States v. Smith, 890 F.2d 711, 716 (5th

Cir. 1969).

C. VIOLATION OF FED. R. EVID. 404(B)

Defendants next contend that the

trial court violated Fed. R. Evid.

404(b)** by permitting the introduction

of testimony concerning an alleged prior

bad act of Dula and Accrabond which was

not charged in the indictment. During

the trial, the government elicited tes-

‘*Pederal Rule of Evidence 404(b)

provides:

Evidence of other crimes, wrongs, or acts

is not admissible to prove the character

of a person in order to show action in

conformity therewith. It may, however,

be admissible for other purposes, such as

proof of motive, opportunity, intent

preparation, plan, knowledge, identity,

or absence of mistake or accident, pro-

vided that upon request by the accused,

the prosecution in a criminal case shall

provide reasonable notice in advance of

trial, or during trial if the court ex-

cuses pretrial notice on good cause

shown, of the general nature of any such

evidence it intends to introduce at

trial.

timony regarding a sale of materials by

Accrabond to Pan Metals, a Korean cor-

poration. Rick Drexler, a former labora-

tory manager at Accrabond, told the jury

that Pan Metals had ordered a Dow Corning

adhesive, but had been sent a substitute

product, which “did not get by” Pan

Metals. (Tr. 969-971). This transaction

was not among those alleged in the in-

dictment.

This Court has set forth a two-part

test for determining the propriety of ad-

mitting evidence of “bad acts” not al-

leged in the indictment. United States

v. Beechum, 582 F.2d 898, 911 (5th Cir.

1978), reh. granted, 563 F.2d 1782,

opinion superseded, 582 F.2d 898, cert.

denied, 440 U.S. 920 (1979). First, it

must be determined that the extrinsic of-

fense evidence is relevant to an issue

other than the defendant’s character.

, ties tl ~

Vp incl. car Al henaly oernls

ta

a ESAT EGR RD Tiina RY oe Send, Oe

A-17

Second, the evidence must possess proba-

tive value that is not substantially out-

weighed by its undue prejudice and must

meet the other requirements of rule

403.” - 3d,

Evidence of an uncharged offense

arising out of the same transaction or

series of transactions as the charged of-

fense is not an “extrinsic” offense with-

in the meaning of Rule 404(b), and is

therefore not barred by the rule. See,

e.g., United States v. Simpson, 709 F.2d

903, 907 (5th Cir. 1983), cert. denied,

464 U.S. 942. The defendants were

charged with conducting a continuing

Federal Rule of Evidence 403

states:

Although relevant, evidence may be ex-

cluded if its probative value is substan-

tially outweighed by the danger of unfair

prejudice, confusion of the issues, or

misleading the jury, or by considerations

of undue delay, waste of time, or need-

less presentation of cumulative evidence.

scheme to defraud, characterized by the

substitution of products, and it was nec-

essary for the government to prove that

the defendants had intentionally devised

a scheme and artifice to defraud. In de-

veloping proof of intent and motive, the

prosecution may offer all of the sur-

rounding circumstances that were rele-

vant. See, e.g., United States v. Man-

cuso, 444 F.2d 691, 695 (5th Cir. 1971)

(other transactions connected with the

offenses charged have long been used to

show a general pattern, the necessary

criminal intent, or the guilty knowledge

of the defendant).

In this case, the existence of a

scheme to defraud te an element of the

offense of wire fraud under 18 U.S.C. §

1343. Although Pan Metals’ order was not

one of those charged in the indictment,

it was relevant to the existence of a

wee ns at oR

ee A eS ee

RES:

>

|

19

scheme and therefore was independently

admissible as direct proof of the scheme

charged. United States v. Santagata, 924

F.2d 391, 393-394 (lst Cir. 1991). In

addition, the admission of the testimony

did not violate Rule 403, which allows a

trial judge to exclude probative evidence

that is substantially outweighed by its

prejudicial effect. The balancing of

probative value against prejudicial ef-

fect is committed to the sound discretion

of the trial judge, a decision that is

final in the absence of abuse of discre-

tion. United States v. Maceo, 947 F.2d

1191 (5th Cir. 1991) (citations omitted).

We find no such abuse here.

D. SUFFICIENCY OF THE EVIDENCE OF

DULA’S INTENT TO DEFRAUD

Dula also argues that a review of

the trial demonstrates that the govern-

ment failed to establish its wire fraud

allegations because it introduced no evi-

dence that the use of the wires was pre- :

ceded by an intent to defraud.

To obtain Dula’s convictions for

crimes of wire fraud alleged in the in-

dictment, the government was required to

prove beyond a reasonable doubt that he

aided and abetted the use of the wires in

furtherance of a scheme to defraud.

United-States v. Shively, 927 F.2d 804

(Sth Cir. 1991), cert. denied sub nom.

Johnson v. United States, 111 S.Ct. 2806

(to obtain mail fraud conviction, govern-

ment must prove scheme or artifice to de-

fraud, specific intent to defraud, and

use of mails for purpose of executing

scheme); United States v. Shaw, 555 F.2d

1295 (5th Cir. 1977) (same elements as to

wire fraud). Dula argues that the proof

adduced by the Government at trial that

the orders were taken by phone, and fol-

lowing these orders a decision may have

x

4

.

|

a

;

4

#

4

;

é

;

\

Q

{

g

4

|

i

been made to substitute an alternative

product, is inadequate.

The above proof is sufficient, even

standing alone, because the sequence and

timing of the phone calls is immaterial.

Once membership in a scheme to defraud is

established, a knowing participant is li-

able for any wire communication which

subsequently takes place or which pre-

viously took place in connection with the

scheme. See United States v. Westbo, 746

F.2d 1022, 1025 (5th Cir. 1984). The

crime of wire fraud did not terminate

with the telephone call, and acts occur-

ring after the use of the wires can be

evidence “from which a jury could infer

participation of the scheme to defraud.”

Id.; see also United States v. McDonald,

837 F.2d 1287, 1293 (5th Cir. 1988) (in-

tent can be proven by the scheme to de-

“A-22

fraud, and may be inferred from other

facts).

». E. VERDICT AGAINST THE WEIGHT OF THE

\ EVIDENCE

\I Finally, appellants contend that the

\\

| trial court abused its discretion by

\denying a motion for new trial which as-

serted that the weight of the evidence

supported the defendants’ acquittal.

The decision to grant or deny a mo-

tion for new trial based on the weight of

the evidence is within the sound discre-

tion of the trial court. An appellate

court may reverse only if it finds the

decision to be a “clear abuse of discre-

tion.” United States v. Martinez, 763

F.2d 1297, 1312 (llth Cir. 1985). Where

the defense has had an opportunity to

question witnesses as to their biases,

and the jury has concluded that the wit-

nesses are credible, the trial court has

broad discretion. “It is the sole prov-

A See Ath te Mae i 9-4 Hid

(2 Beh Dele OA PER at

:

ince of the jury, and not within the

power of this Court, to weigh conflicting

evidence and evaluate the credibility of

witnesses.” United States v. Ivey, 949

F.2d 759, 767 (5th Cir. 1991), cert.

denied sub nom. Wallace v. United States,

113 S.ct. 64 (1992). "This court’s re-

view does not encompass weighing the evi-

dence or judging the credibility of wit-

messes. ... (This court] must affirm

the conviction if a rational jury could

have found the essential elements of the

crimes beyond a reasonable doubt.”

United States v. Thorn, 917 F.2d 170, 173

(Sth Cir. 1990).

Defendants argue that the Govern-

ment’s witnesses were not credible wit-

nesses because they were disgruntled for-

mer employees of the defendants. How-

ever, as stated above, that credibility

determination is best left for the jury.

The district court did not abuse its dis-

cretion in accepting the jury’s assess-

ment of the credibility of the witnesses

and denying a motion for new trial on the

ground that the verdict was against the

weight of the evidence.

III. CONCLUSION

For the foregoing reasons, we AFFIRM

the judgments of the district court, but

DISMISS the defendants’ Brady claims,

without prejudice to their right to raise

them in an action under 28 U.S.C. § 2255.