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UNITED STATES v. SPIEZIO

September 22, 1981

UNITED STATES of America
v.
Frederick A. SPIEZIO, John Ferrara and S & S Chemical, Inc.



The opinion of the court was delivered by: CAHN

MEMORANDUM

This criminal case was tried before me without a jury. Count One of the twenty-one count indictment charged a corporate defendant and two individual defendants with criminal conspiracy under 18 U.S.C. § 371. The indictment alleges that the three defendants conspired to violate, or conspired to aid and abet the violation of, 18 U.S.C. §§ 842(e) and 842(f). *fn1" The remaining twenty counts charge Spiezio with distributing, or aiding and abetting the distribution of, fireworks in violation of 18 U.S.C. §§ 842(e) and 842(f). Before me are defendants' post-trial motions for judgment of acquittal and, in the alternative, motions for arrest of judgment or for new trial.

 I. FACTS

 I made Findings of Fact and reached Conclusions of Law in a bench opinion rendered at the conclusion of the nonjury trial. The bench opinion is appended hereto as Appendix A. The essential facts will be briefly recounted here.

 A. PERSONS INVOLVED

 At all times material to the charges in the indictment defendant Spiezio was the principal operating officer of defendant S & S, a Douglassville, Pennsylvania, manufacturer of explosive materials including fireworks. Defendant Ferrara was an employee of S & S.

 Mark Fisher was a potato chip salesman who purchased explosive materials from S & S and Spiezio for personal use and resale. Fisher became a "cooperating individual" shortly after his arrest by agents of the Bureau of Alcohol, Tobacco and Firearms (ATF) on February 25, 1980. Because of his cooperation, Fisher was not charged in this prosecution.

 B. THE SALES

 On June 29, 1979, Spiezio and Fisher met at the S & S factory. Fisher was interested in buying fireworks for the Fourth of July holiday. Fisher purchased three bags of twenty M-100's ("Big Tans") at $ 15 per bag. Although not involved in any of the discussions, Ferrara was present.

 On July 2, 1979, Fisher went back to the S & S factory to buy more fireworks. Spiezio said to Fisher that selling fireworks was "better than drugs" because the seller will be "out on the street after a fine." Ferrara took Fisher to a forty-foot trailer containing M-100's and smaller fireworks. Fisher bought six bags of M-100's for $ 90. Fisher told Spiezio that he was going to resell some of the fireworks along his route.

 The next day, July 3, 1979, Fisher returned to S & S and purchased an additional $ 150 worth of M-100's. Ferrara filled Fisher's order. When Fisher paid Spiezio, Spiezio said, "(w)atch who you sell them to and if you get caught don't say where you got them." On this date, Fisher observed a number of persons standing in line with boxes of fireworks waiting to pay Spiezio.

 Toward the end of July 1979, Fisher went to the S & S premises and bought some M-80 fireworks ("Reds"). On a date before August 28, 1979, Fisher purchased more "Reds." He bought a case of them from Spiezio at Spiezio's home for $ 300, which price included credit terms.

 On August 28, 1979, an ATF undercover agent purchased one bag of "Reds" from Fisher at the Anvil Inn in Kennett Square, Pennsylvania. Fisher had previously bought these firecrackers from Spiezio.

 On September 4, 1979, the undercover agent met Fisher again in Kennett Square. Fisher took the agent to the S & S premises where the agent purchased four bags of M-100's. Fisher acted as an intermediary during this transaction, but he did not introduce the agent to Spiezio and Ferrara. Fisher made a profit on this sale by paying Spiezio $ 100 for six bags and then reselling four bags to the agent for $ 100, retaining two bags for himself. The agent gave Fisher an additional $ 10 for his pocket.

 On April 23, 1980, both undercover agents went to the S & S premises. Fisher introduced the other ATF agent to Spiezio. Spiezio sold him a case of M-100's for $ 300. Ferrara filled the order and discussed problems caused by poorly made firecrackers. Ferrara said that in the previous year he had sold $ 17,000 worth of firecrackers in the Philadelphia area.

 On June 10, 1980, both agents went to the S & S premises again and arranged to purchase $ 5,000 worth of firecrackers. Once the order was filled and the goods placed in the agents' truck, but before the money was delivered to Spiezio, the ATF agents identified themselves to Spiezio.

 C. FAILURE TO COMPLETE REQUIRED FORMS

 Spiezio did not obtain any information or complete any records relating to ATF Form 4710 in regard to any of the sales to Fisher and the undercover agents.

 D. CHEMICAL ANALYSIS OF FIRECRACKERS

 Qualitative analysis of the firecrackers sold by Spiezio revealed that they contained a perchlorate explosive mixture which is an explosive material regulated under 18 U.S.C. § 841(d). Each M-80 contained 4.1 grams of perchlorate explosive mixture. Each M-100 contained 21.3 grams of the mixture. Spiezio also sold an additional seven types of explosive devices. Each type contained more than 2 grams of perchlorate explosive mixture.

 II. ADMISSIBILITY OF EVIDENCE

 The defendants contend that the court erred in admitting into evidence at trial (a) tape recordings of conversations involving Mark Fisher and federal agents, (b) Fisher's testimony, and (c) motion pictures and still photographs taken to demonstrate the explosive capabilities of the firecrackers. I will address these contentions separately.

 A. TAPE RECORDINGS

 Defendants assert that the admission of tape recordings of conversations between Fisher and the federal agents violated the hearsay rule and substantially prejudiced defendants' right to a fair trial. At trial, defendants objected to the introduction of any recordings of conversations which did not take place in the presence of either defendant. I conditionally admitted the evidence pending the government's proof that these out-of-court statements were admissible as declarations of co-conspirator Fisher. Fed.R.Evid. 801(d)(2)(e).

 At the close of evidence I determined that Fisher was not a co-conspirator. While the failure of the government to meet its burden of showing evidence to be admissible may provide the basis upon which to declare a mistrial, such a decision is not always appropriate. *fn2" United States v. Nelson, 603 F.2d 42 (8th Cir. 1979); United States v. James, 590 F.2d 575 (5th Cir.), cert. denied, 442 U.S. 917, 99 S. Ct. 2836, 61 L. Ed. 2d 283 (1979).

 In the instant case, hearing the recordings in no way prejudiced my verdicts as the finder of fact. I did not rely upon the recorded conversations as substantive evidence in reaching my decision. I was correct to consider the tape of a conversation between Fisher and the agents on February 25, 1980, as it pertained to Fisher's competence and credibility as a witness. I did not consider these conversations for any other purpose.

 Assuming arguendo that the tape recordings were improperly admitted for any purpose, such error would be harmless because the outcome of the case would remain the same. First, Fisher testified after all the tapes were played, and he was cross-examined by defendants' attorneys. Thus, any prejudice from admitting an out-of-court statement was cured. Also, Fisher's prior taped statements were consistent with his direct testimony (introduced after the tapes were played) and were used to rebut the obvious contention of the defendants of improper influence or motive. See Fed.R.Evid. 801(d)(1)(B). I agree that it would have been better practice to receive the direct testimony first and then play the tapes, but I perceive no harm to the defendants in altering the preferred order of proof. Second, the government proved the elements of the crimes charged independently of the conversations between Fisher and the federal agents. Actually, the conversations between the ATF undercover agents and Spiezio and Ferrara were recorded.

 B. FISHER'S TESTIMONY

 Defendants claim three grounds of error regarding Fisher's testimony at the trial. They argue Fisher's testimony was incredible because (i) he read the tape transcripts before testifying, (ii) he admittedly used marijuana, and (iii) he was a corrupt source since he too violated the fireworks law.

 1. REVIEWING OF TAPES BEFORE TESTIFYING

 The fact that Fisher reviewed the tape recordings of his conversations does not render his testimony inherently incredible. It is a factor I took into account in determining what weight to give his testimony.

 2. DRUG USE

 Attacking Fisher's memory of the events in question with evidence of his marijuana use does not seriously undermine the value of his testimony. In this jurisdiction, evidence of drug use may be admitted. United States v. Hicks, 389 F.2d 49 (3d Cir.), cert. denied, 391 U.S. 970, 88 S. Ct. 2046, 20 L. Ed. 2d 885 (1968). The introduction of such evidence requires expert testimony that use of a particular drug in a certain dosage would impair a witness's mental capacity. There was no such testimony here. In determining Fisher's credibility, I considered his demeanor on the stand and I used my common sense in evaluating his testimony. Dyer v. MacDougall, 201 F.2d 265 (2d Cir. 1952). I took into consideration the evidence relating to Fisher's marijuana use and found it had no significant effect on Fisher's credibility or his memory.

 3. WEIGHT ACCORDED INFORMANT'S TESTIMONY

 Defendants argue that I should have given Fisher's testimony little weight because he admittedly violated the law by purchasing "explosive devices" without a license and because he was granted immunity from prosecution for his prior misconduct in exchange for his cooperation with the government. Recognizing this evidence as relevant to bias and the proper assessment of Fisher's credibility, I took due notice of the fact that his testimony might have been tainted. United States v. Kubacki, 237 F. Supp. 638 (E.D.Pa.1965). As fact finder, I balanced these considerations and accepted Fisher's testimony as credible.

 C. MOTION PICTURES

 In general, when determining the admissibility of motion pictures into evidence, the trial court must balance prejudice against probative value. Motion pictures have been properly admitted to demonstrate the physical possibility of events occurring as charged. The occurrences filmed must bear a close relationship to the occurrences relevant in the case. This relationship must be corroborated by an expert. Even where the events filmed do not bear much similarity to the events in question, the film is admissible for the limited purpose of demonstrating a theoretical principle. Harkins v. Ford Motor Co., 437 F.2d 276 (3d Cir. 1970).

 I properly admitted the motion pictures to demonstrate the explosive character of the fireworks. The ATF expert explained the effect of the CD-4 on the demonstration. I took into account his testimony that the CD-4 made the first two explosions more violent and that a mannequin may be more susceptible to damage than a human body. Millers' Nat. Ins. Co., Chicago, Ill. v. Wichita Flour M. Co., 257 F.2d 93 (10th Cir. 1958) (film demonstration of explosive effects of pressure in tank filled with wheat admitted). I weighed the evidentiary value of the films in accordance with those obvious limitations. Moreover, I accorded the films little weight in reaching my determination.

 III. CONSTITUTIONALITY OF 18 U.S.C. § 842(e) and § 842(f)

 A. SECTION 842(e)

 Defendants assert that 18 U.S.C. § 842(e) is unconstitutional under the ninth and tenth amendments and lacks a rational basis to effectuate a valid purpose. I have considered and properly rejected defendants' arguments in my bench opinion. Defendants have raised no new arguments of merit here.

 B. SECTION 842(f) AND FIFTH AMENDMENT PROHIBITION AGAINST SELF-INCRIMINATION

 Defendants challenge the constitutionality of 18 U.S.C. § 842(f) on the ground that the reporting requirement compels the defendants to incriminate themselves in violation of their fifth amendment rights. Defendants' contention is incorrect. The fifth amendment privilege is not violated by reporting requirements of a regulatory nature that apply to lawful activities. California v. Byers, 402 U.S. 424, 91 S. Ct. 1535, 29 L. Ed. 2d 9 (1971); United States v. Stirling, 571 F.2d 708, 727-8 (2d Cir.), cert. denied, 439 U.S. 824, 99 S. Ct. 93, 58 L. Ed. 2d 116 (1978). Explosives, unlike gambling activities, are not inherently criminal, but they are inherently dangerous. Thus Congress has a legitimate aim in controlling explosives which is furthered in a reasonable manner by the reporting requirements of 18 U.S.C. § 842(f). The statute is constitutional and the defendants' fifth amendment rights have not been violated.

 IV. STATUTORY AND REGULATORY SCHEME

 Defendants claim that the state statute relied upon to establish a violation of 18 U.S.C. § 842(e) does not apply to the sales of explosives made to Fisher and the federal agents. The federal statutory scheme makes it illegal for a federally licensed manufacturer and dealer of explosives to distribute explosives in violation of any state law. Defendants dispute my interpretation of the Pennsylvania statute. *fn3"

 Defendants assert that the Pennsylvania statutory provisions should be read to prohibit retail sales but not wholesale transactions. They further claim that all the sales that took place were in wholesale lots and therefore were not in violation of the Pennsylvania statute. This argument is without merit. Defendants' interpretation would defeat the purpose of the statute. Rules of statutory construction demand that statutes be read as a whole. Reading § 1272 in light of § 1275 persuades me that the phrases "offer for sale" or "expose for sale" include a "wholesale" transaction unless it comes within the exception delineated in § 1275. "Wholesale" sales of fireworks are prohibited by § 1272 unless they fall within the precise limits of the § 1275 exception. Section 1275 contains the only exceptions, namely, wholesale shipments destined for foreign states or made to licensed in-state fireworks professionals.

 Section 1272's prohibition against "sell(ing) at retail" merely sets forth one of several types of prohibited activities. Section 1272 also makes it unlawful to offer fireworks for sale or to expose fireworks for sale without the qualification that those transactions be at retail. There is no reason to permit wholesale transactions of fireworks within a state where retail sales are not allowed. The statutory language does not require that type of restrictive interpretation. There was, in the case at bar, no evidence that the fireworks were destined for states other than Pennsylvania. I was therefore correct in holding that ...


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