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United States v. Wellman

decided: October 2, 1987.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
GLENN WELLMAN, DEFENDANT-APPELLANT



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division., No. 86-CR-78 -- Marvin E. Aspen, Judge.

Flaum and Ripple, Circuit Judges, and Eschbach, Senior Circuit Judge.

Author: Eschbach

ESCHBACH, Senior Circuit Judge

Defendant-appellant, Glenn Wellman, was convicted of two counts of mail fraud (18 U.S.C. § 1341(1982)) relating to misrepresentations made regarding whether chemical tanks manufactured by his company complied with Department of Transportation and Coast Guard regulations. Wellman challenges his conviction on various grounds, contending that: (1) the delay in indicting him (just 1 day short of the 5-year statute of limitations) violated due process; (2) the trial court should have suppressed statements he claims he was "tricked" into making to the FBI and the United States Attorney; (3) the evidence was insufficient to support his conviction; (4) the trial court improperly limited his cross-examination of government witnesses, designed to detect supposed bias; (5) the trial court should have granted a continuance to allow him to produce the government's fingerprint expert to testify that a fingerprint analysis of certain documents in the case was negative for his fingerprints; (6) the government improperly attempted to prevent a witness from cooperating with him; (7) various evidentiary rulings of the trial court prejudiced him; and (8) the trial court's sentencing was improper. We find no error and therefore affirm.

I

The defendant, Glenn Wellman, was President and Chief Operating Officer of IWI Industries ("IWI") in Summit, Illinois, and Itasco of California (both referred to collectively as "Itasco" except where necessary to distinguish between the locations of the plants), that manufactured new portable shipping tanks and refurbished used tanks for use in the chemical industry.*fn1

In 1978, M-Chem Chemical Company, a manufacturer of chemicals used in the petroleum industry, learned that Itasco had reconditioned portable shipping tanks available for sale at substantially less than the cost of new tanks. In response to an inquiry from M-Chem, Wellman sent a letter regarding the tanks. With the letter, he attached a "drawing on a limited quantity of portable shipping tanks designed to meet Coast Guard approval" and noted that the "tanks are used but in 'like new' condition, and . . . we would ensure that these tanks would meet Coast Guard specifications by submitting them to our DOT*fn2 testing procedures." Gov't Ex. M-Chem 2. Enclosed with the letter and the drawing was an "exemption" in the name of Petrolite Corporation.*fn3 The drawing attached by Wellman did not correspond to the Petrolite drawing upon which the exemption was based, although Wellman had the Petrolite drawing in his possession at the time the letter and exemption were sent. The tanks sent to M-Chem were constructed, with variations noted below, according to the drawing attached by Wellman rather than the Petrolite drawing. When M-Chem's vice-president called Wellman to ask about the fact that the exemption was in Petrolite's name, Wellman assured her that M-Chem could use the tanks under the exemption and that the next exemption would be issued in M-Chem's name. Additionally, he again assured her that the tanks complied with DOT Specification 57.*fn4

After M-Chem was satisfied that the tanks could legally be used for its purposes, and after it had business contacts in California inspect and photograph some of the tanks, M-Chem decided to order some of the used tanks. The tanks were generally ordered in lots of 10 (although sometimes more) and ranged from approximately $460 to $500 apiece in price. The first order was placed in late 1978 or early 1979. In mid-1979, however, Itasco ran out of the used tanks and told M-Chem that if it wanted additional tanks, it would have to order new tanks, manufactured by Itasco, which would cost slightly more. M-Chem did order some of the new tanks, at a cost of $786 each. M-Chem continued to order tanks throughout 1979.

In December of that year, however, M-Chem's president wrote Wellman to complain that may of the tanks in the most recent shipments did not comply with the parties' agreement or DOT specifications. Specifically, the tanks lacked fusible vent plugs and extended bottom drains with valve guards,*fn5 and many of them lacked DOT nameplates.*fn6 In addition to pointing out the defects, the letter noted that Wellman's apparent understanding that M-Chem had ordered 70 additional tanks, which were to be held for later shipment, was in error. After receiving the letter, Wellman sent the necessary parts. M-Chem withheld payment for the tanks until the defects were cured.

M-Chem continued to order additional tanks for Itasco, although there were occasional problems with the tanks. In one instance, for example, tanks were shipped without identifying numbers, which Wellman subsequently supplied by mailgram. Additionally, when replacement parts, particularly lids and closures, for the tanks were needed, M-Chem ordered them from Itasco, through Wellman.

In mid-1980, M-Chem discovered that it had more serious problems with the tanks when a customer refused to accept M-Chem products shipped in the tanks because the tanks did not comply with government regulations. Upon doing some checking, M-Chem realized that the Petrolite exemption had expired in 1978, before any tanks had even been ordered, and that a replacement exemption had never been ordered, and that a replacement exemption had never been sent. Accordingly, M-Chem's vice-president again called Wellman to have him remedy the problem. Wellman assured her that a replacement exemption indeed existed and that he would send it.

At this point M-Chem contacted the Coast Guard. Following this contact, M-Chem's vice-president again called Wellman and indicated that M-Chem needed a copy of the exemption in its office order to ascertain whether the tanks would serve M-Chem's purposes. Again, Wellman said he would send the new exemption. Still, however, no exemption was received. Subsequent conversations took place between M-Chem's vice-president and Wellman in which, in addition to repeating that he would send the exemption, he assured her that the tanks were "Coast Guard approved DOT 57 tanks." Tr. 78. After these assurances, M-Chem ordered additional tanks, although the price had risen to $946.

Following this order, M-Chem again contacted Wellman regarding documentation that the tanks complied with government regulations. Following this contact, on February 5, 1981, Wellman sent M-Chem a letter (the "count mailing" for count 1 of the indictment) in which he "confirm[ed] that the tanks previously purchased and currently on hand by your company are constructed as per DOT 57 and DOT 60 specifications as requested by the Department of Transportation and the U.S. Coast Guard." Gov't Ex. M-Chem 16. Additionally, he wrote that:

I am listing the approval numbers as requested and if there is additional information required, please contact me.

Department of Transportation, Title 49 CFR Section 178.251, 178.253, 178.253-5B, Part 6450.25 1, 64.61, 64.63, 54.15-13 and E-8347-A.

Id.

Recognizing that many of the numbers Wellman characterized as "approval numbers" were merely citations to the governing DOT regulations (although the reference to "Part 6450" appears to have been a typographical error), and not understanding what "E-8347-A" referred to, M-Chem's vice-president called Wellman to tell him, again, that an exemption was needed, not citations to regulations. Wellman promised to send the exemption. After an erroneous mailing of retest certificates, which M-Chem again had to straighten out over the phone with Wellman, a purported exemption was sent along with a letter on March 11, 1981 (the letter erroneously bore the year 1982), which stated, in pertinent part:

In followup to our recent telephone conversation, I am enclosing copies of our D.O.T. exemption E-8347-A which is self explanatory.

Gov't Ex. M-Chem 18a.*fn7

This letter was the "count mailing" for count 2 of the indictment.

M-Chem continued to order tanks from Itasco, through Wellman, until informed by DOT and Coast Guard representatives that the tanks did not meet DOT Specification 57 and could not be used. The exemption sent by Wellman turned out to be bogus, and thus could not be used for shipment of the tanks. When M-Chem informed DOT and the Coast Guard that if required to cease all use of tanks it would be put out business, DOT representatives told M-Chem that it could write DOT to obtain an emergency exemption which would allow use of the tanks if certain steps were taken to ensure that the tanks could safely be used. Among other things, M-Chem was required under the terms of the emergency exemption to provide the tanks with fusible vent plugs and to pressure test the tanks. M-Chem took those steps and continued to use the tanks.

When Coast Guard and DOT representatives inspected the Itasco tanks on hand at the M-Chem facility, they concluded that none of the tanks on hand either met DOT Specification 57 or were approved by the Coast Guard. The primary noncompliance items related to closures and venting devices found on the covers to the tanks, although some were also "out of test," meaning that they had not been retested within the last two years, as required by government regulations, and some lacked DOT nameplates.

An indictment was filed on February 4, 1986, charging Wellman with two counts of mail fraud and one count of forgery. After trial, the district court dismissed the forgery count, holding that there was no evidence of intent to defraud the United States, an essential element. The propriety of that dismissal is not before us.

On the mail fraud counts, the government's theory of the case was that Wellman engaged in a scheme to defraud M-Chem of its right to have tanks which complied with government regulations, and that he furthered that scheme through the use of the United States Mail, in violation of 18 U.S.C. § 1341 (1982)*fn8, when he sent the February 5th and March 11th, 1981 letters to M-Chem.

Wellman's defense consisted of his contention that the tanks complied with DOT Specification 57 when sent to M-Chem and the resulting non-compliance resulted from lost or damaged covers or nameplates on the tank, which M-Chem was responsible for replacing. Additionally, he denied any knowledge that the exemption in Itasco's name was bogus, asserting that it had been obtained by personnel in the California office and sent to him, and that he merely forwarded the exemption to M-Chem with a cover letter.

After a three day trial, the jury returned a verdict of guilty on both counts of mail fraud. Wellman was sentenced to one year in the custody of the Attorney General on one of the counts and 5 years of probation on the other. In addition, he was ordered to pay a fine and to perform 2000 hours of community service work during his probation. In pre- and post-trial motions (and now in this court) Wellman raised the grounds outlined above, which he claimed entitled him either to dismissal of the indictment, a new trial, or a judgment of acquittal.

II

We first consider Wellman's contention that the pre-indictment delay was violative of due process. The statute of limitations is the primary (although not exclusive) safeguard of the defendant's right to be indicted in a timely fashion. United States v. Lovasco, 431 U.S. 783, 789, 97 S. Ct. 2044, 2048, 52 L. Ed. 2d 752 (1979) (quoting United States v. Marion, 404 U.S. 307, 322, 92 S. Ct. 455, 464, 30 L. Ed. 2d 468 , (1971); United States v. Watkins, 709 F.2d 475 (7th Cir. 1983); United States v. Solomon, 688 F.2d 1171, 1179 (7th Cir. 1982). In some limited circumstances, however, such delay, even though the indictment circumstances, however, such delay, even though the indictment is filed within the statutory period, may amount to a violation of the defendant's right to a fair trial under the Due Process Clause. As the Supreme Court has succinctly put it, "the Due Process Clause has limited role to play in protecting against oppressive delay." Lovasco, 431 U.S. at 789, 97 S. Ct. at 2044. To make out such a claim, there must be: (1) prejudice to the defendant, and (2) an impermissible purpose for the delay. See United States v. Perry, 815 F.2d, slip op. at 5 (7th Cir. 1987); United States v. Jones, 808 F.2d 561, 567 (7th Cir. 1986); United States v. Brock, 782 F.2d 1442, 1443 & n.1 (7th Cir. 1986); United States v. Brown, 742 F.2d 359 (1984).

Wellman's allegations of prejudice are insufficient to support such a claim. He has alleged that the corporate records of the California entity were lost or destroyed when that entity was dissolved in 1983*fn9 and that witnesses from that entity cannot be located. Thus, he claims he has lost the opportunity to show that the fraudulent exemption was prepared in California without his knowledge. However, he has not identified specific documents or witnesses which would aid his case; he has not made any showing of his efforts if any, to obtain the testimony or documents. Such showings are essential to his claim. See Brown, 742 F.2d at 362. Accordingly, we reject Wellman's contention that the pre-indictment delay violated Due Process.*fn10

III

We also reject Wellman's contention that the trial court should have suppressed statements that he made to the FBI, which he thought were given as part of a DOT civil investigation. He contended that the government misled him about the nature of the investigation and that it had a duty to inform him that he was under investigation by the grand jury. He contended that the admission of the statements, obtained through government deception, violated due process. Additionally, he claims that statements he made to an Assistant United States Attorney should have been suppressed because her use of a grand jury subpoena was "deceptive," that is, he subpoenaed and as a result went to the Assistant United State's Attorney's Office, with his lawyer, and while there made incriminating statements in a interview. At the end of the interview, he was told that he need not appear before the Grand Jury.

We conclude that the magistrate and the district court were correct in declining to suppress the statements. The magistrate specifically found that the FBI agent who interviewed Wellman did noting to affirmatively mislead him about the nature of the investigation. Wellman does not challenge this finding as "clearly erroneous," nor do we believe he could. The mere fact that Wellman thought that the agent was investigating a civil matter does not give rise to an obligation on the part of the government to inform the defendant that he was the subject of a criminal investigation. See United States v. Serlin, 707 F.2d 953, 956 (7th Cir. 1983). In Serlin, we held:

To prevail on [a claim of government deception] defendant must produce clear and convincing evidence that the agents affirmatively mislead [sic] him as to the true nature of their investigation . . . . Simple failure to inform defendant that he was the subject of the investigation, or that the investigation was criminal in nature, does not amount to affirmative deceit unless defendant inquired about the nature of the investigation and the agent's failure to respond was intended to mislead.

Id.

Wellman places particular emphasis on the fact that the Agent stated that he was there to investigate matters relating to the DOT. However, those representations were entirely accurate given the nature of the criminal investigation that was proceeding.

Also, even assuming that Wellman could establish a causal connection between the Assistant United States Attorney's use of the grand jury subpoena and the statements he made during the interview, we do not believe that the use of the subpoena was improper. At the time Wellman was subpoenaed, the government may well have thought his testimony necessary. When he produced the documents sought and made incriminating statements voluntarily at ...


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