IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
August 21, 2009
UNITED STATES OF AMERICA,
ALI AMIRNAZMI, DEFENDANT.
The opinion of the court was delivered by: Rufe, J.
MEMORANDUM OPINION & ORDER
Following a jury trial on February 13, 2009, Defendant was convicted of ten counts of a Superseding Indictment, including: Count One, conspiracy to violate IEEPA, in violation of 18 U.S.C. § 371; Counts Two, Four and Five, violations of IEEPA, in violation of 50 U.S.C. § 1705(c), and of aiding and abetting the same, in violation of 18 U.S.C. § 2;*fn1 Counts Eight through Ten, false statements to government officials in violation of 18 U.S.C. § 1001;*fn2 and Counts Eleven through Thirteen, bank fraud in violation of 18 U.S.C. § 1344.*fn3 Defendant now moves for judgment of acquittal pursuant to Federal Rule of Criminal Procedure 29 on Counts One, Two, Four, Five, Eight, either Nine or Ten, and Eleven.*fn4 For the reasons that follow, the Court will deny Defendant's Motion.*fn5
I. UNCONSTITUTIONAL DELEGATION
Defendant asserts that IEEPA and the IEEPA regulations constitute an unconstitutional delegation of Congress's legislative authority to the executive branch.*fn6 As a result, Defendant urges that he is entitled to judgment of acquittal on all of the IEEPA charges, including Counts One, Two, Four and Five. Defendant argues that IEEPA delegates unbridled discretion to the Executive to promulgate regulations amounting to criminal laws without providing "intelligible principles" upon which to base the same.*fn7 The Court rejected this argument in its January 5, 2009 Memorandum Opinion and Order denying Defendant's motion to dismiss these charges from the Indictment prior to trial.*fn8 The Court finds no reason to reconsider its prior ruling and will rest on the reasoning therein. Thus, the Court will not grant Defendant a judgment of acquittal on Counts One, Two, Four and Five on this basis.
II. UNCONSTITUTIONALLY VAGUE
Defendant argues that he should also be granted judgment of acquittal on the IEEPA changes because the IEEPA regulations issued and administered by OFAC are void for vagueness. Defendant contends that the IEEPA regulations did not give him notice that ChemPlan was not exempt from the Iranian trade embargo as informational materials, nor did they give him notice that he had to obtain a license from OFAC to engage in the business activities that he did.*fn9
A criminal statute or regulation is unconstitutionally vague and violates the Due Process Clause of the Fifth Amendment if "it fails to give a person of ordinary intelligence fair notice that his contemplated conduct is forbidden."*fn10 Yet, "economic regulation is subject to a less strict vagueness test because its subject matter is often more narrow, and because businesses, which face economic demands to plan behavior carefully, can be expected to consult relevant legislation in advance of action."*fn11 "Indeed, the regulated enterprise may have the ability to clarify the meaning of the regulation by its own inquiry, or by resort to an administrative process."*fn12
Here, the IEEPA regulations restricting trade with Iran "govern the activities of relatively sophisticated individuals who are deliberately engaged in international commerce and, therefore, must be familiar with (if not expert in) various legal regimes... in multiple countries."*fn13 Thus, there is no concern that the IEEPA regulations will "sweep within their coverage the everyday acts of average citizens."*fn14 In addition, the licensing department of OFAC administers the process by which businesses and natural persons can apply for a license or request a letter providing interpretative guidance.*fn15 Moreover, OFAC has an electronic and a telephone hotline that can be contacted with questions regarding the IEEPA regulations.*fn16 In light of the narrow subject matter and reach of the IEEPA regulations, as well as the sophisticated nature of the persons they affect and the ability of such persons to obtain guidance from OFAC itself, the IEEPA regulations are not unconstitutionally vague.*fn17
Moreover, the underlying statute at issue includes a scienter requirement requiring the Government to prove beyond a reasonable doubt that a criminal defendant acted willfully.*fn18 "In other words, this is a case where ignorance of the law is a defense; the inability to appreciate the meaning of the law negatives the mens rea required for conviction," and Defendant was free to, and did, argue this to the jury.*fn19 The Supreme Court "has recognized that a scienter requirement may mitigate a law's vagueness, especially with respect to the adequacy of notice to the complainant that his conduct is proscribed.*fn20 "[W]here the punishment imposed is only for an act knowingly done with the purpose of doing that which the statute prohibits, the accused cannot be said to suffer from lack of warning or knowledge that the act which he does is a violation of the law."*fn21 Hence, IEEPA's requirement of specific intent further alleviates any concern that Defendant was convicted under a law that he could not have reasonably understood. As IEEPA and its regulations are not unconstitutionally vague, the Court denies Defendant's Motion for a judgment of acquittal on Counts One, Two, Four and Five on this basis.
III. MULTIPLICITY OF COUNTS NINE AND TEN
Defendant also seeks judgment of acquittal on either Count Nine or Count Ten, arguing that the two counts are multiplicitous. Defendant previously moved to dismiss one of these two counts prior to trial,*fn22 but the Court denied that motion without prejudice, finding that the issue was better resolved afterwards.*fn23
At trial, both Special Agent Hueston of the IRS and Special Agent McAllister of the FBI testified that on the morning of June 8, 2008, they interviewed Defendant together at his residence.*fn24 According to their testimony, Defendant told them that his most recent trip to Iran was to visit his mother and to attend a petrochemical forum.*fn25 They testified that Defendant told them he had not signed any agreements regarding business in Iran, either on his most recent trip to Iran or at any time in the past.*fn26 They also stated that Defendant denied to them that he had ever conducted business meetings in Iran.*fn27
Special Agent McAllister testified that after their morning interview of Defendant, she obtained a search warrant for not only Defendant's residence, but also his office in Exton, Pennsylvania.*fn28 The search warrant was executed later that day.*fn29 Special Agent McAllister joined the search of Defendant's office, at which Defendant was present.*fn30 She told Defendant "that agents were looking for any documents or materials relating to any business dealings in Iran, the government of Iran or any entities associated with Iran."*fn31 He responded that there were no such documents.*fn32 When Special Agent McAllister reminded him that he had said that morning that he had drafted but not signed such a document, he replied that they were on his laptop which had been seized by Customs and Border Protection in Detroit.*fn33 Upon being informed that they were going to continue their search, Defendant offered to pull up the requested information on an office computer.*fn34 Special Agent McAllister also testified that because of Defendant's continuing lies, she was forced to keep surveillance on him, review and analyze all of the documents seized and have all of the documents written in Farsi translated.*fn35
Defendant argues that because Agent McAllister was present during Agent Hueston's interview of Defendant, Counts Nine and Ten are therefore multiplicitous. Defendant advocates that the Court adopt a test used by other circuits allowing separate violations for identical false statements under 18 U.S.C. § 1001 only if (1) the declarant was asked the same question and gave the same answer; and (2) the later false statement further impaired the operations of the government.*fn36 Yet, the first flaw with Defendant's logic is that he did not give identical false statements. As the testimony at the trial clearly demonstrates, Defendant was not asked the same question nor did he give the same answer on the morning of June 6, 2008 as compared to the evening of that same day. When he was interviewed by Special Agent Hueston and Special Agent McAllister, Defendant made false statements relating to the purpose of his most recent trip to Iran, whether he had ever had business meetings in Iran and whether he had signed any agreements regarding business in Iran. In contrast, on the evening of June 6, 2008, Defendant made false statements as to the existence and location of documents relating to his business dealings in Iran. Hence, Defendant is not entitled to a judgment of acquittal on Count Nine or Count Ten, even under the test he advances, so the Court need not decide whether to adopt it.
Furthermore, Special Agent McAllister testified how Defendant's lying further impaired their investigation, forcing the investigating agents to review the many documents by themselves and to verify independently anything told to them by Defendant. Thus, Count Nine and Count Ten are not multiplicitous as the false statements underlying the two counts were not identical and the later statement did further impair the Government's investigation of Defendant. As Defendant advances no other theory under which he should be granted a judgment of acquittal on these counts, the Court will not grant him the same.
IV. SUFFICIENCY OF THE EVIDENCE
Finally, Defendant challenges the sufficiency of the evidence supporting his conviction on Counts One, Two, Four, Five, Eight and Eleven. The Court must "apply a particularly deferential standard of review when deciding whether a jury verdict rests on legally sufficient evidence."*fn37 It cannot "weigh the evidence or determine the credibility of the witness[es]."*fn38 Rather, the Court must "view the evidence in the light most favorable to the government, and... sustain the verdict if any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt."*fn39 A "'claim of sufficiency of the evidence places a very heavy burden'" on a defendant.*fn40
A. Informational Materials Exemption
Defendant claims he is entitled to judgment of acquittal on Counts One, Two, Four and Five because of IEEPA's informational materials exemption. The information materials exemption in the IEEPA statute makes the following not illegal:
The importation from any country, or the exportation to any country, whether commercial or otherwise, regardless of format or medium of transmission, of any information or informational materials, including but not limited to, publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and newswire feeds.*fn41
This exemption is limited by the IEEPA regulations as follows:
This section does not exempt from regulation or authorize transactions related to information and informational materials not fully created and in existence at the date of the transactions, or to the substantive or artistic alteration or enhancement of informational materials, or to the provision of marketing and business consulting services. Transactions that are prohibited notwithstanding this section include, but are not limited to, payment of advances for information and informational materials not yet created and completed (with the exception of prepaid subscriptions for widely circulated magazines and other periodical publications), and provision of services to market, produce or co-produce, create or assist in the creation of information and informational materials.*fn42
Defendant agreed to the jury being instructed with this language from the IEEPA statute and regulations.*fn43 Defendant argues that the Government failed to prove beyond a reasonable doubt that the information materials exemption did not apply to Defendant's charged conduct.
Defendant does not argue that the informational materials exemption applies to building chemical plants in Iran.*fn44 Nor does Defendant contend that the exemption encompasses the hiring of personnel to work in Iran. The Government produced evidence which if viewed in the light most favorable to the Government could lead a reasonable factfinder to believe that Defendant's transactions with IBACO included the building of physical plants in Iran*fn45 and the hiring of an engineer.*fn46 Thus, even if ChemPlan were covered by the informational materials exemptions, Defendant would still not be entitled to a judgment of acquittal on Counts One and Four.
With regard to ChemPlan, the Record contains evidence of the nature of the product Defendant was selling. The jury heard testimony from Ms. Estelle Tracy, who was the Marketing Manager and then the Director of Marketing for Defendant's company.*fn47 She described ChemPlan as a database and a planning tool.*fn48 According to Ms. Tracy, ChemPlan's database contained the recipes for a wide variety of chemicals.*fn49 She testified that these recipes were derived from publicly available information, and from proprietary data that Defendant used his chemical wherewithal to extract.*fn50 Ms. Tracy also stated that ChemPlan included a planning tool that "allowed the user to study the impact of different parameters on something like production costs to make your chemical."*fn51 Ms. Tracy testified that a user of ChemPlan could enter his or her own data into ChemPlan and it would produce customized reports.*fn52
The jury also heard testimony from Joseph Mehl that ChemPlan "was developed using FoxPro database relational database management system to provide end users with... chemical processing information."*fn53 Mr. Mehl stated that to his knowledge, "each [ChemPlan] package that was sold was specifically tailored to the end user, depending on what industry they worked in."*fn54 Defendant himself described ChemPlan as "a dynamic tool, which allows the user to generate 'what if' scenarios."*fn55
With respect to evidence of what is permitted under the informational materials exemption of the IEEPA regulations, the jury heard testimony from Ms. Rafi Crocket, a former OFAC Compliance Officer, as to her understanding that software did not qualify as informational materials.*fn56 She also stated that the information and informational materials that were not prohibited from being imported and exported between the United States and Iran were "things that are already in existence."*fn57 Special Agent Hueston testified that Defendant explained to him that the IEEPA did not prohibit the sharing of informational materials, such as information that was publicly available and could be found in a library.*fn58 Finally, Mr. Eric Von Vorys testified pursuant to a subpoena Defendant served on Sanford Research Institute ("SRI") Consulting.*fn59
Mr. Von Vorys testified on cross examination that the materials SRI Consulting had sold to Iranian companies pursuant to the information materials exemption existed in fixed form,*fn60 could not be changed*fn61 and contained no software or technology.*fn62
Viewing the evidence in the light most favorable to the Government, a reasonable factfinder could find that the Government had proven beyond a reasonable doubt that ChemPlan was "not fully created and in existence at the date of the [relevant] transactions."*fn63 Hence, a reasonable factfinder could have found that the informational materials exemptions did not apply to Defendant's actions. Therefore, Defendant is not entitled to a judgment of acquittal on Counts One, Two, Four and Five on this basis.
B. Trigger of License Requirement
Defendant argues that he is entitled to judgment of acquittal on Counts Four and Five.*fn64
He asserts that the Government failed to establish beyond a reasonable doubt that the IEEPA regulations require a license in order to conduct the preliminary business activities prior to the final contract that encompassed his dealings with IBACO and NITD.*fn65
The IEEPA regulations require a license before engaging "in any transaction or dealing in or related to (1) Goods or services of Iranian origin or owned or controlled by the Government of Iran; or (2) Goods, technology, or services for exportation, reexportation, sale, or supply, directly or indirectly, to Iran or the Government of Iran."*fn66 The regulations also broadly define the term "transaction or dealing" to include but not limited to "purchasing, selling, transporting, swapping, brokering, approving, financing, facilitating, or guaranteeing."*fn67
Defendant's argument misconstrues the Government's burden. The IEEPA regulations require a license not based on whether the conduct occurs prior to or after the execution of a final contract, but rather based upon the nature of the conduct itself. Hence, the Government need not prove that the IEEPA regulations require a license before Defendant could engage in preliminary activities. Instead, the Government must show beyond a reasonable doubt that Defendant engaged in activities the nature of which required a license under the IEEPA regulations.
Here, the Government produced abundant evidence that Defendant engaged in extensive negotiations with IBACO regarding the building of a Polyvinylbutyral ("PVB") and a Super Aborbent Polymer ("SAP") plant in Iran. The Government submitted a memorandum of understanding ("MOU") as to the PVB Project signed in December 2007 by Defendant and Mr. Shahmirzadi, the Managing Director of IBACO.*fn68 The Government also produced several e-mails from Defendant to Mr. Shahmirzadi discussing the two projects.*fn69 In one of the e-mails, Defendant writes to Mr. Shahmirzadi that he was taking steps to secure a chemical engineer to handle the PVB project.*fn70 The Government put forth minutes from meetings on April 23, 2008 and May 20, 2008 between Defendant and IBACO representatives involving the PVB project.*fn71
Finally, the Government produced at trial an agreement for the construction of the SAP plant signed by Defendant and Mr. Shahmirzadi on May 31, 2008.*fn72 There was sufficient evidence for a reasonable factfinder to find that Defendant engaged in brokering, approving, facilitating or guaranteeing while engaging in business activities with IBACO. Thus, a reasonable factfinder could have found that Defendant required a license from OFAC for the same.
With respect to NITD, the Government submitted as evidence a MOU signed on May 2, 2008 by Defendant and Seyed H. Dabaghian, the president of NITD.*fn73 The purpose of the MOU was to create a joint venture company. The MOU listed responsibilities and obligations of each party. NITD's obligations and responsibilities included gathering information, as well as evaluating the feasibility and cost of the joint venture. The obligations of Defendant's company included evaluating how to transfer chemical software to Iran, submitting its United States business tax returns for previous years, and agreeing "not to transfer part or all of software and data base rights to third party during the MOU term."*fn74 Here too, there is sufficient evidence for a reasonable factfinder to find that Defendant engaged in swapping, brokering, approving, facilitating and guaranteeing when he engaged in business activities with NITD. And again, a reasonable factfinder could have found that Defendant required a license from OFAC for the same.
A reasonable factfinder could have found that the Government proved beyond a reasonable doubt that Defendant required a license before engaging in the business activities with IBACO and NITD that he did. Therefore, Defendant is not entitled to a judgment of acquittal on Count Four or Count Five, and the Court denies his Motion for the same.
C. Intent in Count Eight
Defendant contends that he is also entitled to judgment of acquittal on Count Eight relating to his July 30, 2004 letter to OFAC. Defendant mistakenly contends that the sole evidence the Government produced as to this count was a copy of that July 30, 2004 letter.*fn75
Defendant makes much of his statement in that letter that he had lost the correspondence from OFAC to which he was responding, arguing that given that statement, the Government did not prove beyond a reasonable doubt that he acted willfully or knowingly in making false statements to OFAC.*fn76 The Government submitted at trial a June 30, 2004 letter from OFAC which appears to be the communication to which Defendant was responding.*fn77 That letter was discovered in file cabinets that Defendant's wife had moved from Defendant's office to a storage unit.*fn78 Thus, a reasonable factfinder could determine that even the statement that he had lost the June 30, 2004 communication from OFAC was false.
Assuming that the jury did believe that Defendant had lost the June 30, 2004 letter from OFAC, there was still sufficient evidence from which the jury could determine that Defendant wilfully and knowingly made false statements to OFAC in his July 30, 2004 letter. In determining whether Defendant acted with the necessary mens rea, the jury was free to consider all the facts and circumstances shown by the evidence that may prove what was in his mind at the time. Viewing the evidence in the light most favorable to the Government, the Record is replete with evidence from which a reasonable factfinder could determine that Defendant knew of the IEEPA regulations,*fn79 that he went to great lengths to disguise his violations of the same*fn80 and that this instance was another example of that same behavior. Furthermore, the Government produced evidence at trial that Defendant had previously lied to OFAC regarding the fee to attend an Iranian petrochemical conference in 2000.*fn81 Hence, there was sufficient evidence for a jury to find Defendant guilty of each element of Count Eight beyond a reasonable doubt, and Defendant is not entitled to a judgment of acquittal on this count.
D. Materiality in Count Eleven
Defendant claims he is entitled to judgment of acquittal on Count Eleven because the Government failed to prove that Defendant's false or fraudulent representations were material to Wachovia Bank's decision to approve Defendant's loan. A false statement is material if it has "'a natural tendency to influence, or [is] capable of influencing, the decision of the decisionmaking body to which it was addressed.'"*fn82 Defendant agreed that the jury be instructed that a material fact is one which would reasonably be expected to be of concern to a reasonable and prudent person in relying upon the representation or statement in making a decision on whether or not to extend a loan or line of credit to the defendant.*fn83
At trial, the Government called David Sweeney, Vice Presidential of Commercial Lending for Penn Liberty Bank, to testify.*fn84 Mr. Sweeney testified that his bank requested Defendant's personal and business tax returns in order assess the risk it was taking in making a loan to Defendant.*fn85 Mr. Sweeney also stated that he based his decision to make the loan to Defendant based upon "what he was showing as income on his tax returns."*fn86 Most significantly, Mr. Sweeney stated that in general, the supporting documents submitted with a loan application are extremely important and that the bank bases its whole decision on the same.*fn87 Finally, Mr. Sweeney testified that it would have been important to his decision to know that Defendant had reported negative income in the tax returns he submitted to the IRS.*fn88
The Government also called Todd Tucker, a loan officer from Alliance Bank, to testify.*fn89
Mr. Tucker stated that Alliance Bank bought Defendant's loan from Wachovia Bank in 2007.*fn90
Mr. Tucker testified that he relies on loan documents to assess risk when deciding whether or not to buy a loan from a bank.*fn91 He also stated that he relied on the Defendant's loan documents, including his personal and business tax returns, when he decided to buy Defendant's loan from Wachovia.*fn92
Finally, the Government submitted for the jury's review not only the loan documents from Wachovia Bank,*fn93 but also the personal and business tax returns Defendant submitted to the IRS.*fn94 On this evidence, a reasonable juror could have found that the Government proved the materiality of Defendant's false representations beyond a reasonable doubt.
Nevertheless, the Government need not have proved materiality beyond a reasonable doubt, as it is not an essential element of this offense. The statute under which this count was charged provides as follows:
Whoever knowingly executes, or attempts to execute, a scheme or artifice -- (1) to defraud a financial institution; or to obtain any of the moneys, funds, credits, asserts, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises; shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.*fn95
The Third Circuit recently held that the phrase "false or fraudulent" must be read to give "the two disjunctively connected terms separate meanings."*fn96 Following the Third Circuit's reasoning, the Court will give these terms separate meanings by reading the bank fraud statute as demanding a showing that the pretenses, representation or promises were "either 'fraudulent,' which would require proof of materiality, or 'false'... which would not require proof of materiality."*fn97
Hence, proof of materiality is not always required to establish a violation of the bank fraud statute, as establishing that false representations were made to a bank is sufficient to convict a defendant. Here, the Government produced evidence from which a reasonable factfinder could find that Defendant made false representations to Wachovia. This, by itself and without any showing as to materiality, is sufficient for the Court to deny Defendant judgment of acquittal on Count Eleven. Hence, the Court will deny Defendant's motion for judgment of acquittal on Count Eleven.
An appropriate Order follows.