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United States v. Pulungan

June 15, 2009


Appeal from the United States District Court for the Western District of Wisconsin. No. 07-CR-144-BBC-Barbara B. Crabb, Chief Judge.

The opinion of the court was delivered by: Easterbrook, Chief Judge.

ARGUED MAY 15, 2009

Before EASTERBROOK, Chief Judge, and BAUER and FLAUM, Circuit Judges.

Federal law prohibits the export of "defense articles" without a license. 22 U.S.C. §2778. A "defense article" is any item on the United States Munitions List, which §2778(a) authorizes the President to promulgate. The President has delegated that power to the State Department's Directorate of Defense Trade Controls. The Munitions List includes "[r]iflescopes manufactured to military specifications." 22 C.F.R. §121.1 Category 1(f). Designations are not subject to judicial review. 22 U.S.C. §2778(h).

Doli Pulungan tried in 2007 to export 100 Leupold Mark 4 CQ/T riflescopes (made in Oregon by Leupold & (r) (r) Stevens, Inc.). He planned to transship through Saudi Arabia to Indonesia in order to conceal the destination, because his clients told him that the United States had an embargo on military exports to Indonesia. There had been such an embargo between 1999 and 2005, but there was none when Pulungan tried to acquire and export the 'scopes. He was charged with violation of §2778(c), however, on the theory that the Leupold Mark 4 CQ/T riflescope is "manufactured to military specifications." A jury found him guilty of attempting to export defense articles without a license, and the judge sentenced him to 48 months' imprisonment.

Section 2778(c) makes it a crime to violate (or attempt to violate) any part of §2778 "willfully". The parties agree that "willfully" means with knowledge that a license is required. Pulungan concedes that he attempted to acquire and export Leupold Mark 4 CQ/T riflescopes to Indonesia without a license. But he contends that the prosecution did not prove that these 'scopes are "manufactured to military specifications"-and that, even if they are so manufactured, he did not know it and there-fore lacked the required mental state.

Pulungan contends that the prosecution must prove, beyond a reasonable doubt, that the Leupold Mark 4 CQ/T riflescope was "manufactured to military specifications"-just as the prosecution must prove in a prosecution for distributing cocaine that the substance is cocaine rather than sugar. The prosecutor addressed this topic through the testimony of Anthony Dearth, who testified that the Directorate of Defense Trade Controls has concluded that the Leupold Mark 4 CQ/T is "manufactured to military specifications"-but he would not say what those specifications are or why the Directorate believes that the Mark 4 CQ/T is "manufactured to" them. The decision itself was not produced.

After Dearth testified, the prosecutor asked the judge to instruct the jury that, as a matter of law, the Leupold Mark 4 CQ/T riflescope is "manufactured to military specifications." The judge gave the requested instruction, taking the issue out of the jury's hands. The judge agreed with the prosecutor that §2778(h) prevents any inquiry, by either judge or jury, into the propriety of an item's classification. The judge confirmed this ruling after trial when denying Pulungan's motion for acquittal. 561 F. Supp. 2d 1019 (W.D. Wis. 2008). Pulungan disputes this understanding of §2778(h) and adds that, if the prosecutor is right, then the defendant's sixth amend-ment right to trial by jury supersedes the statute. See United States v. Gaudin, 515 U.S. 506 (1995) (in a prosecution for fraud, the judge must allow the jury to decide whether the false statements were material; the judge may not treat materiality as a matter of law).

Section 2778(h) provides: "The designation by the President (or by an official to whom the President's functions... have been duly delegated), in regulations issued under this section, of items as defense articles or defense services for purposes of this section shall not be subject to judicial review." (Emphasis added.) So if 22 C.F.R. §121.1 Category 1(f) read "any Leupold Mark 4 CQ/T riflescope", that designation would be incontestable (even though made by the Directorate rather than the President), and the question for the jury would be whether the item that Pulungan tried to export was indeed a Leupold Mark 4 CQ/T riflescope. If Pulungan had conceded that the Leupold Mark 4 CQ/T riflescope is "manufactured to defense specifications", he could not avoid liability by arguing that the Munitions List should not require licenses for these items. See United States v. Martinez, 904 F.2d 601 (11th Cir. 1990). But he does not concede that the Leupold Mark 4 CQ/T riflescope is within the domain of 22 C.F.R. §121.1 Category 1(f).

The only regulation is that "[r]iflescopes manufactured to military specifications" require export licenses. It is easy to see why the regulation's language deals with attributes rather than names; an effort to enumerate each item would be futile, not only because some are bound to be overlooked (imagine a regulation that tried to list all bicycles by manufacturer and model number) but also because manufacturers change their designations. The Mark 4 may be succeeded by a Mark 5, or the CQ/T model may become the CQ/X. But while a narrative description may be the most sensible way to proceed, it also limits the effect of §2778(h). Only material "in regulations" is covered by that statute. The Directorate's conclusion that the Leupold Mark 4 CQ/T riflescope is "manufactured to military specifications" is not in a regulation and so is unaffected by §2778(h).

The Directorate's claim of authority to classify any item as a "defense article," without revealing the basis of the decision and without allowing any inquiry by the jury, would create serious constitutional problems. It would allow the sort of secret law that Panama Refining Co. v. Ryan, 293 U.S. 388 (1935), condemned. (That case dealt with an unpublished regulation that remained "in the hip pocket of the administrator," a serious problem apart from the non-delegation holding usually associated with Panama Refining.) A regulation is published for all to see. People can adjust their conduct to avoid liability. A designation by an unnamed official, using unspecified criteria, that is put in a desk drawer, taken out only for use at a criminal trial, and immune from any evaluation by the judiciary, is the sort of tactic usually associated with totalitarian régimes. Government must operate through public laws and regulations. See United States v. Farinella, 558 F.3d 695 (7th Cir. 2009). Thus the United States must prove, and not just assert, that the Leupold Mark 4 CQ/T riflescope is "manufactured to military specifications."

It does not necessarily follow that proof must come in open court. Congress has made some special provisions for classified information-and both the manufacturing details of the Leupold Mark 4 CQ/T riflescope and the precise specifications for military 'scopes may be classified as state secrets; some details also may be trade secrets. Until Congress enacted the Classified Information Procedures Act, 18 U.S.C. App. 3 §§ 1--16, defendants frequently engaged in "greymail"-they threatened to expose secrets as the price of successful prosecution, which induced the government to dismiss the indictments or prosecute for less serious crime. The Classified Information Procedures Act is designed to allow disputes involving material legitimately kept secret to be resolved without unnecessary public disclosures.

Pulungan's lawyer said at oral argument that he had not asked for a hearing under this statute. Nor did the prosecutor offer one. Both took an all-or-nothing approach: Pulungan demanded a public jury trial, and the prosecutor total secrecy. We need not decide whether either litigant has waived or forfeited its position by disdaining the statutory middle ground-or whether any error is harmless (Pulungan has never argued that the Mark 4 CQ/T 'scope is not actually a mil-spec product and didn't ask for an expert to explore that subject)-because Pulungan is entitled to prevail even if the criminal-justice system must proceed on the assumption that the Mark 4 CQ/T riflescope is a "defense article."

It is not enough for the Leupold Mark 4 CQ/T riflescope to be a "defense article." Pulungan cannot be convicted unless he knew that it is one, and that licenses are necessary to export them. The United States concedes that the word "willfully" in ยง2778(c) requires it to prove that the defendant knew not only the material facts but also the legal rules. (We need not decide whether the concession ...

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